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(Bloomberg) -- Morgan Stanley is boosting the size of its latest offering of X Holdings Corp. debt to $4.74 billion with no discount, further reducing exposure to the social-media platform that banks have held on their books, according to people with knowledge of the matter.
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Morgan Stanley had been marketing a $3 billion portion but decided to add more to the offering after receiving strong demand from investors, said the people, who were not authorized to speak publicly. The deal is expected to price on Thursday.
A Morgan Stanley representative did not immediately provide a comment.
Seven Wall Street banks got stuck with the debt after financing Elon Musk’s purchase of the platform, then called Twitter Inc., in 2022. Morgan Stanley orchestrated that nearly $13 billion financing package and has been leading the effort to sell the debt.
The transaction being marketed now is the third in a frenetic period of less than a month.
The first was a $1 billion loan sale to test the market, which priced in a range of 90-to-95 cents on the dollar. That was quickly followed up with a sale of $5.5 billion in debt for 97 cents on the dollar. Banks still hold a total of $6 billion worth of X debt.
The sales mark a surprising turnaround for what had long been seen as an ill-fated financing of Musk’s purchase. Banks typically sell debt into the market immediately after such a buyout, but investors balked at the idea, concerned about the price Musk had paid and that his changes to content-moderation policies would drive away advertisers. That left the debt hung on banks’ books for over two years.
But the billionaire’s close ties to President Donald Trump, including an advisory role, swiftly changed perceptions about X’s prospects. Investors expect Musk’s position in the administration to help his business interests, even as his aggressive government cost-cutting efforts have sown upheaval in Washington.
In its marketing efforts, Morgan Stanley has also shared new details about X’s adjusted revenue and profits, suggesting that its finances have stabilized after a long slump.
--With assistance from Aaron Weinman and Sridhar Natarajan.
(Adds details about planned size and pricing, material about the history of banks holding X debt.)
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