Banks Shed More X Debt; Just $1.3bln Remains

In a significant development, banks have successfully offloaded another chunk of debt tied to Elon Musk's $44 billion acquisition of Twitter, now rebranded as X. According to Reuters, the latest sale involved $4.74 billion of secured loans, which were priced at par or at 100 cents to the dollar, indicating increased investor confidence in the platform's financial prospects. This sale follows a previous transaction in early February, where banks sold $5.5 billion of X's debt at 97 cents on the dollar, with an initial yield of 11%.

The recent debt sales mark a shift in sentiment, driven partly by increased investor interest in Musk's ventures and X's improving financial outlook. The platform's financials have shown signs of improvement, with adjusted earnings increasing in the last quarter of 2024. This improvement, coupled with growing advertiser support, has boosted investor confidence in X's debt.

The successful sale of X's debt signals a positive turnaround for the platform, which has faced numerous challenges since Musk's takeover in 2022. The initial acquisition was funded by a $6.5 billion secured term loan, a $500 million revolving credit facility, $3 billion unsecured loan, and $3 billion of secured loans. The recent debt sales indicate that banks are gradually reducing their exposure to X's debt, with only $1.3 billion remaining on their books.

The evolution of debt sale terms over time suggests that the market's perception of X's financial health has improved. Investors have become more confident in the company's prospects, as reflected in the higher pricing of the debt sales. However, it is essential to monitor subsequent debt sales and X's overall financial performance to assess the long-term sustainability of this trend.

Elon Musk's involvement with President Trump has also sparked renewed interest from some investors in X's debt. The recent debt sale, priced higher than initially expected, indicates that investors are more optimistic about X's prospects under Musk's leadership and strategic vision. However, it remains to be seen whether this power is luring back advertisers, as X's financial situation remains challenging with stagnant user growth and unimpressive revenue.

In conclusion, the successful sale of X's debt signals a positive turnaround for the platform, with investors demonstrating increased confidence in its financial prospects. As banks continue to reduce their exposure to X's debt, the platform's future remains uncertain, hinging on effective management and renewed advertiser confidence.