Gowri Gurumurthy and Rachel Graf

Updated Sat, Jun 21, 2025, 4:41 AM2 min read

(Bloomberg) — Elon Musk’s artificial intelligence startup xAI Corp. lured enough investors to its $5 billion debt deal by offering sweeter pricing on Friday.

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Morgan Stanley (MS) wrapped up commitments for the package, which included a mix of bonds and loans, with higher interest rates and a bigger discount on one component.

The offering presented a rare opportunity for credit investors to gain exposure to artificial intelligence and Musk’s business empire. However, his feud with US President Donald Trump and concerns about xAI’s financials led investors to demand better terms.

In addition to the pricing changes, the company said it planned to raise another $4.3 billion in equity as a balance sheet cushion and also altered some terms on debt documents to make them more investor-friendly, Bloomberg previously reported. The company responsible for the AI chatbot Grok needs the new money, in part, because it is burning through cash so quickly to fuel its growth.

The $3 billion of new bonds priced at a 12.5% yield, as did a $1 billion fixed-rate term loan, according to a person familiar with the matter. A separate $1 billion loan has a coupon 7.25 percentage points over the benchmark, priced at a discounted 96 cents on the dollar.

A spokesperson for Morgan Stanley declined to comment. An xAI representative did not respond to a request for comment.

When the debt package launched on June 2, it garnered demand in excess of $3.5 billion by the end of that day, with TPG Angelo Gordon pledging itself as an anchor investor. Interest waned as Musk publicly sparred with Trump and investors reviewed xAI’s financials. Commitments were originally due on Tuesday, but Morgan Stanley extended the time frame.

The more attractive investor terms stand in contrast to many other debt deals this week that tightened pricing and accelerated deadlines due to strong demand.

—With assistance from Jeannine Amodeo.

(Updates with final pricing and rephrasing throughout.)

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