A group of banks, including Morgan Stanley, Bank of America, Barclays, and Mitsubishi UFJ, has sold the final portion of debt related to Elon Musk’s US$44 billion acquisition of X, formerly Twitter, according to the Wall Street Journal.

The US$1.2 billion in loans was sold at 98 cents on the dollar.

Both the banks and X have not commented on the sale, and Bank of America has declined to respond.

Musk financed the X takeover through US$13 billion in loans, including secured term loans, a revolving credit facility, secured loans, and unsecured loans.

Morgan Stanley and six other banks were involved in providing the financing package that supported Musk’s acquisition.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Banks’ exit from Twitter debt reflects broader LBO risk assessment pattern

The final sale of Twitter/X debt at 98 cents on the dollar by Morgan Stanley and others represents a typical endgame for banks in high-leverage transactions facing uncertainty.

This pattern mirrors historical leveraged buyout cycles, where banks initially syndicate debt and later sell remaining positions as performance becomes clearer, similar to what happened following the 2005 peak when LBO volume reached $119.8 billion with $85.9 billion in debt financing 1.

The slight discount on the $1.2 billion debt portion signals modest concern but not catastrophic losses, consistent with how banks managed exposure following other major leveraged acquisitions like RJR Nabisco ($25 billion with $19 billion in debt) 2.

For perspective, banks frequently retain a small portion of debt from major deals before selling at modest discounts once clarity emerges about the acquired company’s performance trajectory.

The transaction completes the banks’ exit from a high-profile leveraged deal, allowing them to redeploy capital toward new opportunities in an environment where investment banking activity is anticipated to recover in 2025 3.

2️⃣ Musk’s Twitter buyout highlights the transformative impact of debt-driven acquisitions

The Twitter acquisition demonstrates how heavy debt structures ($13 billion total financing) can accelerate platform changes as owners pursue profitability to service obligations.

Since completing the $44 billion deal, Musk has implemented dramatic changes including rebranding to X, modifying content policies, and developing new revenue streams—moves that parallel how other leveraged buyout targets like Dell underwent rapid business model transformation after Michael Dell took the company private with $19 billion in debt 2.