Wall Street Banks Sell Off $13B Musk Twitter Loans, Ending Hung Deal

Wall Street banks have unloaded $13 billion in loans from Elon Musk's 2022 Twitter (now X) acquisition, with sales accelerating in 2025 and the final tranche sold in April at near par. This resolves a notorious "hung" deal burdened by X's volatility. The episode underscores risks in celebrity-driven leveraged buyouts.
Wall Street Banks Sell Off $13B Musk Twitter Loans, Ending Hung Deal
Written by Jill Joy

Wall Street banks, long burdened by the risky debt from Elon Musk’s 2022 acquisition of Twitter—now rebranded as X—are finally unloading billions in loans that have haunted their balance sheets. The process, which began accelerating in early 2025, marks a turning point for lenders like Morgan Stanley, Bank of America, and Barclays, who initially provided $13 billion to finance the $44 billion buyout. These institutions have been stuck with the debt amid X’s operational upheavals, advertiser boycotts, and Musk’s controversial management decisions, making it one of the most notorious “hung” deals since the financial crisis.

Recent sales have chipped away at this overhang. In January, banks prepared to offload up to $3 billion of X’s senior debt, as reported by The Wall Street Journal, with investors showing renewed interest despite the platform’s volatility. Sources indicated prices could reach 90 to 95 cents on the dollar, a discount reflecting ongoing risks but a vast improvement over earlier valuations that dipped as low as 60 cents.

The Evolution of a Troubled Debt Package

By February, progress was evident: Banks sold another substantial portion, leaving just $1.3 billion on their books, according to Reuters. This followed a surge in investor appetite, fueled by X’s improving metrics, such as user growth and advertising rebounds tied to Musk’s political influence. Posts on X itself highlighted this momentum, with users like Sawyer Merritt noting a $5.5 billion sale amid “surging investor interest” and references to X’s “inflection point” in finances, drawing from Wall Street Journal coverage.

The final push came in April, when the remaining $1.2 billion was sold at nearly 98 cents on the dollar, as detailed in Yahoo Finance. This transaction, led by Morgan Stanley, capitalized on a brief market calm before tariff-related volatility, allowing banks to exit fully. Bloomberg reported that X even considered buying back the last tranche itself in March, a move that underscored the company’s stabilizing cash flows despite persistent challenges.

Implications for Leveraged Finance Markets

For industry insiders, this saga reveals deeper lessons in leveraged buyout financing. The X debt became a symbol of post-pandemic excesses, where banks committed massive sums without immediate syndication, only to face higher interest rates and regulatory scrutiny. As Bloomberg noted, lenders struggled to offload portions earlier due to Musk’s sweeping changes, including content moderation shifts that alienated advertisers.

Now, with the debt cleared, banks are eyeing a broader thaw in credit markets. A May Bloomberg article highlighted how Wall Street is preparing to pitch another $6 billion in stuck buyout debt, leveraging the X success to lure investors back. This could signal a revival in mergers and acquisitions, though risks remain: X’s loans carried high interest rates—around 9% over benchmarks—burdening the company with annual payments exceeding $1 billion.

Investor Sentiment and Future Risks

Sentiment on platforms like X reflects cautious optimism. Posts from users such as squawksquare discussed the removal of this “overhang” for related stocks like Tesla, while others like Olga Nesterova questioned who the buyers are, speculating on hedge funds or private credit firms stepping in. Yet, not all views are rosy; older posts warned of broader banking stresses, with references to unrealized losses and regional bank failures tied to similar toxic assets.

Analysts point out that while banks have escaped, X itself isn’t out of the woods. Musk has denied some reports of financial woes, but emails cited in Journal pieces suggest ongoing problems. For lenders, the episode underscores the perils of celebrity-driven deals: What began as a high-profile win turned into a multi-year headache, costing banks hundreds of millions in writedowns.

Strategic Shifts in Banking Priorities

Looking ahead, this resolution allows banks to refocus on core lending. Morgan Stanley, for instance, has been pivotal in orchestrating these sales, using its syndication expertise to navigate choppy waters. As per Reuters, the process involved discreet outreach to investors, avoiding public auctions that could depress prices further.

The X debt unwind also highlights the growing role of alternative investors. Private credit funds, flush with capital, absorbed much of the risk, a trend that’s reshaping how Wall Street handles large leveraged loans. Insiders note that without this shadow banking influx, banks might still be holding the bag.

Lessons Learned and Market Outlook

Ultimately, the full sale of X’s $13 billion debt package closes a chapter on one of Wall Street’s most infamous trades. It took over two years, multiple tranches, and a mix of market recovery and Musk’s resilience to achieve. For executives poring over risk models, it’s a case study in due diligence: Overvaluing a platform’s potential amid founder unpredictability can lead to prolonged exposure.

As of August 2025, with no new reports of lingering X debt on bank books, the focus shifts to whether this success encourages bolder financing. Yet, echoes of caution persist—posts on X warn of systemic banking vulnerabilities, from outflows in financial ETFs to hedge fund short-selling sprees. In a volatile economy, the X precedent serves as both relief and reminder: High-stakes deals demand ironclad exit strategies.

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