Will Musk vs. Trump affect xAI’s $5 billion debt deal?

The escalating online clash between Elon Musk and former President Donald Trump has drawn significant attention to Musk's social media platform, X, previously known as Twitter. However, this public dispute may pose challenges for xAI, Musk’s artificial intelligence venture that recently merged with X. Earlier this year, Musk initiated the merger of these two entities, and recent reports from Bloomberg reveal that he is seeking to secure $5 billion in debt, alongside an additional $300 million through a secondary sale, to bolster the newly formed company. This financial maneuver is becoming increasingly complicated amid the deterioration of Musk’s relationship with Trump, who was once seen as an ally. In an ironic twist, as Musk and Trump exchanged heated posts on their respective platforms, Morgan Stanley was attempting to rally potential investors for xAI. The Wall Street Journal noted that the investment bank had gathered xAI executives on Thursday to pitch the debt opportunity, but the ongoing feud may have affected investor confidence. Initially, Morgan Stanley aimed to sell the debt at face value, or 100 cents on the dollar. However, market reports indicated that the debt was trading at around 95 cents on the dollar during the height of the feud. Investors expressed concerns that the declining prices might compel Morgan Stanley to offer more attractive terms, including a higher interest rate, to entice buyers.