Morgan Stanley has encountered difficulties in selling debt for xAI, the parent company of the social media platform X.

This comes as tensions between Elon Musk and US president Donald Trump have escalated on their respective platforms.

Sources indicate that the bank aimed to sell the debt at about 100 cents on the dollar. However, trading prices fell to 95 cents in June.

This decline has led investors to suggest that Morgan Stanley may need to offer higher interest rates to attract buyers.

This debt sale follows Musk’s announcement earlier this year to raise US$5 billion for xAI through debt and other means.

The ongoing public feud between Musk and Trump, who were previously perceived as allies, has complicated these financing efforts.

🔗 Source: TechCrunch

🧠 Food for thought

1️⃣ Musk’s history of public feuds has repeatedly impacted his business ventures

The current tension with Trump isn’t Musk’s first high-profile conflict affecting his companies’ financial standing.

In 2018, Musk’s infamous “funding secured” tweet about taking Tesla private led to SEC charges, a US$20 million fine, and his removal as Tesla chairman 1.

This pattern of social media conflicts has consistently created volatility for his businesses, with each controversy requiring significant damage control from his executive teams and investors.

Musk previously served on Trump’s business advisory council before publicly resigning in 2017 over the Paris climate agreement withdrawal, stating that “climate change is real” 2.

These incidents highlight how Musk’s personal brand and business interests are closely connected, creating both opportunities and vulnerabilities for investors.

2️⃣ Debt financing has become increasingly critical for AI startups despite higher costs

xAI’s pursuit of US$5 billion in debt financing reflects a broader trend in the tech sector, where companies are increasingly turning to debt markets to fund expansion without diluting equity.