Musk's political ascendancy stirs hopes of redemption for X banks
Elon Musk's political ascendancy has some Wall Street banks hoping they may soon be able to offload $13 billion of debt that backed the billionaire's purchase of the social media platform X, three banking sources said.
Some of the lenders in the consortium, which included Morgan Stanley and Bank of America, think Musk's emergence as a close aide to Republican President-elect Donald Trump could boost the prospects of X, previously known as Twitter, the sources said. If that were to happen, it would allow them to sell the debt without having to take a massive loss on the deal, the sources said.
Musk, X, Morgan Stanley and Bank of America did not immediately respond to a request for comment.
Banks typically sell such loans to investors soon after the deal is done, but in the case of X, which Musk bought for $44 billion in 2022, they have been stuck holding the debt. Musk's sweeping changes to the platform, including laying off many people who worked to moderate content, and one of his posts on X, scared away advertisers and hit revenues. That reduced the value of the debt, as the risk of default increased.
In recent months, one of the sources said, some banks expected X had seen increased traffic as users flocked to the platform around big events like the U.S. elections. Trump, whose account on the platform was restored by Musk after the previous management banned him in January 2021, has been regularly posting on it.
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