Latest news with #xAi
Yahoo
8 hours ago
- Business
- Yahoo
Musk's xAi increases yield offer on $5 billion debt raise, source says
By Tatiana Bautzer NEW YORK (Reuters) -Elon Musk's xAi is increasing the yield it is offering on a $5 billion debt raise led by Morgan Stanley, a source with knowledge of the matter said on Friday. xAi is offering to pay 12.5% yield on $3 billion in bonds, said the source who asked for anonymity to disclose non-public information. Previously, sources told Reuters the company had offered a 12% yield. xAi is also offering 12.5% fixed yield on a $1 billion term loan and set to price a $1 billion term loan B at 725 basis points over the Secured Overnight Financing Rate, known as SOFR. The term loan B is set to be priced at a discount of 96 cents on the dollar, the source said. The initial offering on the securities was 12% on the fixed loan and 700 basis points over the SOFR on the floating rate loan. Junk-rated bonds paid an average yield to maturity of 7.602%, according to ICE BofA High Yield Index. The deadline for investor commitments was extended from Tuesday to Friday and allocations will be done one day after closing, the source said. If the deal closes on Friday, allocations will happen on Monday. An increase in the yield offer could mean that investors had probably agreed to buy the debt only for a higher yield. The borrower also has lesser flexibility on pricing when investor demand is modest. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, Reuters reported earlier this week. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. xAi did not immediately respond to a request for comment. Morgan Stanley declined to comment.
The Star
8 hours ago
- Business
- The Star
Musk's xAi increases yield offer on $5 billion debt raise, source says
FILE PHOTO: A 3D-printed miniature model of Elon Musk and the xAI logo are seen in this illustration taken January 23, 2025. REUTERS/Dado Ruvic/Illustration/File Photo NEW YORK (Reuters) -Elon Musk's xAi is increasing the yield it is offering on a $5 billion debt raise led by Morgan Stanley, a source with knowledge of the matter said on Friday. xAi is offering to pay 12.5% yield on $3 billion in bonds, said the source who asked for anonymity to disclose non-public information. Previously, sources told Reuters the company had offered a 12% yield. xAi is also offering 12.5% fixed yield on a $1 billion term loan and set to price a $1 billion term loan B at 725 basis points over the Secured Overnight Financing Rate, known as SOFR. The term loan B is set to be priced at a discount of 96 cents on the dollar, the source said. The initial offering on the securities was 12% on the fixed loan and 700 basis points over the SOFR on the floating rate loan. Junk-rated bonds paid an average yield to maturity of 7.602%, according to ICE BofA High Yield Index. The deadline for investor commitments was extended from Tuesday to Friday and allocations will be done one day after closing, the source said. If the deal closes on Friday, allocations will happen on Monday. An increase in the yield offer could mean that investors had probably agreed to buy the debt only for a higher yield. The borrower also has lesser flexibility on pricing when investor demand is modest. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, Reuters reported earlier this week. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. xAi did not immediately respond to a request for comment. Morgan Stanley declined to comment. (Reporting by Tatiana Bautzer; Additional reporting by Matt Tracy; Editing by Mark Porter, Alexandra Hudson)
Yahoo
9 hours ago
- Business
- Yahoo
Musk's xAi increases yield offer on $5 billion debt raise, source says
By Tatiana Bautzer NEW YORK (Reuters) -Elon Musk's xAi is increasing the yield it is offering on a $5 billion debt raise led by Morgan Stanley, a source with knowledge of the matter said on Friday. xAi is offering to pay 12.5% yield on $3 billion in bonds, said the source who asked for anonymity to disclose non-public information. Previously, sources told Reuters the company had offered a 12% yield. xAi is also offering 12.5% fixed yield on a $1 billion term loan and set to price a $1 billion term loan B at 725 basis points over the Secured Overnight Financing Rate, known as SOFR. The term loan B is set to be priced at a discount of 96 cents on the dollar, the source said. The initial offering on the securities was 12% on the fixed loan and 700 basis points over the SOFR on the floating rate loan. Junk-rated bonds paid an average yield to maturity of 7.602%, according to ICE BofA High Yield Index. The deadline for investor commitments was extended from Tuesday to Friday and allocations will be done one day after closing, the source said. If the deal closes on Friday, allocations will happen on Monday. An increase in the yield offer could mean that investors had probably agreed to buy the debt only for a higher yield. The borrower also has lesser flexibility on pricing when investor demand is modest. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, Reuters reported earlier this week. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. xAi did not immediately respond to a request for comment. Morgan Stanley declined to comment. Sign in to access your portfolio
Reuters
9 hours ago
- Business
- Reuters
Musk's xAi increases yield offer on $5 bln debt raise, source says
NEW YORK, June 20 (Reuters) - Elon Musk's xAi is increasing the yield it is offering on a $5 billion debt raise led by Morgan Stanley, a source with knowledge of the matter said on Friday. xAi is offering to pay 12.5% yield on $3 billion in bonds, said the source who asked for anonymity to disclose non-public information. Previously, sources told Reuters the company had offered a 12% yield. xAi is also offering 12.5% fixed yield on a $1 billion term loan and set to price a $1 billion term loan B at 725 basis points over the Secured Overnight Financing Rate, known as SOFR. The term loan B is set to be priced at a discount of 96 cents on the dollar, the source said. The initial offering on the securities was 12% on the fixed loan and 700 basis points over the SOFR on the floating rate loan. Junk-rated bonds paid an average yield to maturity of 7.602%, according to ICE BofA High Yield Index. (.MERH0A0), opens new tab The deadline for investor commitments was extended from Tuesday to Friday and allocations will be done one day after closing, the source said. If the deal closes on Friday, allocations will happen on Monday. An increase in the yield offer could mean that investors had probably agreed to buy the debt only for a higher yield. The borrower also has lesser flexibility on pricing when investor demand is modest. The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, Reuters reported earlier this week. Unlike Musk's debt deal when he acquired Twitter, Morgan Stanley did not guarantee how much it would sell or commit its own capital to the deal, in what is called a "best efforts" transaction, according to one person familiar with the terms. xAi did not immediately respond to a request for comment. Morgan Stanley declined to comment.
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.
