As per Bloomberg, Morgan Stanley has initiated a sale of debt instruments for xAI, which consist of a floating-rate term loan, a fixed-rate term loan, and senior secured notes. Initial pricing discussions indicate a high borrowing cost, with interest rates potentially reaching 12% on the senior notes. Commitments are expected to be finalized by June 17, reports indicate.
The funds raised from this debt issuance will be allocated toward “general corporate purposes,” sources told Bloomberg, and are anticipated to bolster Musk’s significant investments in AI infrastructure—including a large data center in Memphis.
This new influx of capital coincides with Musk’s AI startup gearing up for a $300 million share sale, providing employees the opportunity to liquidate their shares. A larger fundraising round is expected to follow, wherein xAI will offer new equity to external investors, according to the Financial Times.
Established less than two years ago, xAI captured attention earlier this year when it acquired X, Musk’s social media platform previously known as Twitter. The AI startup is also responsible for Grok, the chatbot integrated into X as a competitor to OpenAI’s ChatGPT. Musk mentioned that this acquisition valued xAI at $80 billion and X at $33 billion.
xAI is among several ventures led by Musk that are aggressively seeking capital. In addition to the $5 billion debt offering, Neuralink, Musk’s neurotechnology company, recently secured $650 million, while xAI’s secondary stock sale contributes an additional $300 million.
The debt sale has already garnered over $3.5 billion in demand, Bloomberg reported, highlighting persistent interest in Musk’s AI ambitions.
Morgan Stanley, a long-standing ally of Musk, is spearheading the financing. The bank previously advised on Musk’s $44 billion acquisition of Twitter in 2022 and has subsequently worked to offload the associated debt—successfully clearing the final tranche this April.
