Morgan Stanley Markets $5 Billion Debt for Elon Musk’s xAI Amid Political Headwinds

Morgan Stanley (NYSE:MS) is reportedly marketing a $5 billion debt package for xAI, Elon Musk's artificial intelligence startup, as investor interest in the space remains strong—even as political risks around Musk grow.

Deal Structure and Caution from Lenders

According to Reuters, the financing includes:

• A floating-rate Term Loan B at 97 cents on the dollar, with pricing set at SOFR + 700 basis points

• A mix of fixed-rate bonds and loans yielding up to 12%

Unlike its role in Musk's 2022 Twitter acquisition, Morgan Stanley is offering this deal on a “best efforts” basis, avoiding any obligation to underwrite or hold the debt—an indication of more restrained lender risk appetite after the X/Twitter deal left banks stuck with $13 billion in unsold loans.

Political Risk Looms

The financing campaign comes amid reports of rising friction between Musk and former President Donald Trump. Analysts note that this could complicate xAI's future federal contracts or regulatory goodwill, especially with Musk's public political commentary drawing increasing attention.

Investor Appetite for AI Remains High

Despite the headwinds, investors remain attracted to the high-yield structure and Musk's track record. xAI is also said to be pursuing a $20 billion equity raise at a valuation between $120 billion and $200 billion, reinforcing the market's bullish stance on generative AI infrastructure plays.

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To monitor how Musk-linked public companies are responding to this news, access real-time rating and valuation changes using the Up/Down Grades by Company API. It offers a view into shifting analyst sentiment on firms like Tesla (NASDAQ:TSLA), Morgan Stanley (NYSE:MS), and other AI-adjacent stocks.