Latest news with #MattTracy
Yahoo
4 days ago
- Business
- Yahoo
Exclusive-Musk's xAI is on track to raise $5 billion in fresh debt, following modest demand
By Matt Tracy, Echo Wang and Davide Barbuscia NEW YORK (Reuters) -Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI didn't immediately respond to a request for comment while Morgan Stanley declined. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, said the two people, who were briefed on the deal. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Exclusive-Musk's xAI is on track to raise $5 billion in fresh debt, following modest demand
By Matt Tracy, Echo Wang and Davide Barbuscia NEW YORK (Reuters) -Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI didn't immediately respond to a request for comment while Morgan Stanley declined. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, said the two people, who were briefed on the deal. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11-06-2025
- Business
- Yahoo
Morgan Stanley markets $5 billion for Elon Musk-owned xAI in loans, bonds, sources say
By Matt Tracy, Echo Wang and Tatiana Bautzer NEW YORK (Reuters) -Morgan Stanley is marketing a $5 billion package of bonds and two loans on behalf of billionaire Elon Musk-owned xAI, at the same time as a falling out between the world's richest man and the U.S. president plays out in public, sources familiar with the matter told Reuters. As of last week, the bank started discussing a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points (bps) over the SOFR benchmark rate, one person familiar with the matter said. It is offering a second option, loan and bonds at a fixed rate of 12%, the person familiar added. The terms are preliminary and will depend on investor demand, according to the source. Morgan Stanley held a meeting with investors last week in which some financials of the company were shared. Morgan Stanley is taking a different approach in marketing the $5 billion debt for Musk's xAi from previous transactions, sources familiar with the matter told Reuters. Morgan Stanley will not guarantee the issue volume or commit its own capital to the deal, the sources said. The 'best efforts' transaction, which means the size of the debt will depend on investor interest, is not an uncommon practice but shows banks are probably being more prudent lending in an uncertain macro environment. The people spoke on condition of anonymity because the discussions with investors are not public. Morgan Stanley declined to comment, while xAI did not immediately respond to a request for comment. Banks were also likely choosing this approach to avoid putting themselves in a similar spot to when they committed to give $13 billion of debt to Musk to finance his $44 billion acquisition of X in 2022 and could not get out of that position for two years. The X financing is considered one of the boldest bets by seven banks led by Morgan Stanley who committed $13 billion in debt to the $44 billion acquisition by Elon Musk in October 2022. Soon after the deal to buy Twitter, as X was called at the time, the Federal Reserve began raising U.S. interest rates and Musk started restructuring the company. Banks typically sell such loans to investors soon after the deal is done, but in the case of X, they were stuck holding it for over two years. They could only dispose of that debt earlier this year capitalizing on X's improved operating performance over the previous two quarters as traffic on the platform rose before and after the U.S. presidential elections. Musk's role in U.S. President Donald Trump's return to office and public displays of his closeness to the most powerful position in the world also boosted interest for the debt from investors jockeying for some influential link to a new regime, as well as a surge in investor interest for exposure to artificial intelligence companies. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity funding, according to people familiar with the matter. Two of the people added the deal would value the company at more than $120 billion, while the other two people said figures as high as $200 billion had been discussed. Musk initially explored raising funds in parallel with a merger of xAI and social media platform X, but that plan did not move forward, two of the people said. What has changed in just the space of a few months is Musk's political sway over Trump after an acrimonious schism erupted between the two. That has cast a cloud over the future of the businesses owned by the world's richest man, which though private could be hurt if the federal government chooses to cancel contracts or grants to them. It has also heightened the risk of demand being reduced for any money that will be raised or investors asking for a higher risk premium on the new debt.
Yahoo
10-06-2025
- Business
- Yahoo
Morgan Stanley markets $5 billion for Elon Musk-owned xAI in loans, bonds, sources say
By Matt Tracy, Echo Wang and Tatiana Bautzer NEW YORK (Reuters) -Morgan Stanley is marketing a $5 billion package of bonds and two loans on behalf of billionaire Elon Musk-owned xAI, at the same time as a falling out between the world's richest man and the U.S. president plays out in public, sources familiar with the matter told Reuters. As of last week, the bank started discussing a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points (bps) over the SOFR benchmark rate, one person familiar with the matter said. It is offering a second option, loan and bonds at a fixed rate of 12%, the person familiar added. The terms are preliminary and will depend on investor demand, according to the source. Morgan Stanley held a meeting with investors last week in which some financials of the company were shared. Morgan Stanley is taking a different approach in marketing the $5 billion debt for Musk's xAi from previous transactions, sources familiar with the matter told Reuters. Morgan Stanley will not guarantee the issue volume or commit its own capital to the deal, the sources said. The 'best efforts' transaction, which means the size of the debt will depend on investor interest, is not an uncommon practice but shows banks are probably being more prudent lending in an uncertain macro environment. The people spoke on condition of anonymity because the discussions with investors are not public. Morgan Stanley declined to comment, while xAI did not immediately respond to a request for comment. Banks were also likely choosing this approach to avoid putting themselves in a similar spot to when they committed to give $13 billion of debt to Musk to finance his $44 billion acquisition of X in 2022 and could not get out of that position for two years. The X financing is considered one of the boldest bets by seven banks led by Morgan Stanley who committed $13 billion in debt to the $44 billion acquisition by Elon Musk in October 2022. Soon after the deal to buy Twitter, as X was called at the time, the Federal Reserve began raising U.S. interest rates and Musk started restructuring the company. Banks typically sell such loans to investors soon after the deal is done, but in the case of X, they were stuck holding it for over two years. They could only dispose of that debt earlier this year capitalizing on X's improved operating performance over the previous two quarters as traffic on the platform rose before and after the U.S. presidential elections. Musk's role in U.S. President Donald Trump's return to office and public displays of his closeness to the most powerful position in the world also boosted interest for the debt from investors jockeying for some influential link to a new regime, as well as a surge in investor interest for exposure to artificial intelligence companies. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity funding, according to people familiar with the matter. Two of the people added the deal would value the company at more than $120 billion, while the other two people said figures as high as $200 billion had been discussed. Musk initially explored raising funds in parallel with a merger of xAI and social media platform X, but that plan did not move forward, two of the people said. What has changed in just the space of a few months is Musk's political sway over Trump after an acrimonious schism erupted between the two. That has cast a cloud over the future of the businesses owned by the world's richest man, which though private could be hurt if the federal government chooses to cancel contracts or grants to them. It has also heightened the risk of demand being reduced for any money that will be raised or investors asking for a higher risk premium on the new debt. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Corporate bond market has muted response to Moody's US rating downgrade
By Matt Tracy WASHINGTON (Reuters) -Moody's downgrade of the U.S. sovereign credit rating late Friday appeared to have a modest impact on corporate bond market activity on Monday, as spreads widened slightly and new bond sales started the week softer than expected. Late Friday, ratings agency Moody's announced a one-notch downgrade to the U.S. government's credit rating, at the same time changing its rating outlook from stable to negative. "This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns," Moody's wrote late Friday. The downgrade from Moody's follows similar moves from Fitch in 2023 and Standard & Poor's in 2011. Investment grade bond spreads widened modestly on Monday after the Friday ratings downgrade, according to Dan Krieter, head of fixed income strategy at BMO Capital Markets. The ICE BofA Corporate Index was roughly one basis point wider on the day while the High Yield Index was around five bps wider, Krieter noted. IG bond spreads had previously tightened two basis points to 93 bps to close Friday trading, according to the ICE BofA Corporate Bond Index. This is their tightest since March 27 before Trump's 'Liberation Day' tariffs. Junk bond spreads had tightened a modest 4 bps to 316bp late Friday, according to the ICE BofA High Yield Bond Index. At least six companies, including French bank Crédit Agricole and food services company Sodexo, announced bond offerings on Monday but there were some who decided to hold back any issuance, said one senior syndicate source. Monday issuance volume is likely to be less than $10 billion which was a slow start for a week that is expected to see $30 billion of new bond supply, according to Krieter. "So a bit lighter with some borrowers potentially wanting to see how the market reacted to the news," he said. "Given the muted response, I would expect (issuance) tomorrow to be large." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
