Elon Musk's xAI Corp. has increased the yield on its debt offering to make the deal more attractive to investors.
Terms of xAI's Debt Offering
Earlier this month, xAI offered a package consisting of $3 billion in bonds yielding 12.5%, and a $1 billion fixed-rate loan at the same rate. Additionally, a $1 billion term loan B was offered at 7.25 percentage points above the benchmark rate with a discount of 96 cents on the dollar. While the initial terms were less attractive, the new conditions are intended to draw more investors.
Investor Concerns and xAI's Plans
Despite efforts to attract investors, xAI faces skepticism due to concerns regarding the company's financial resources. Amid Musk's disagreements with U.S. President Donald Trump, some investors express worry that xAI may have to offer excessively high yields to complete the deal. Around the same time, reliable sources reported that the company plans to raise an additional $4.3 billion in equity to assuage these concerns.
The Future of xAI's Debt Offering
The debt offering from xAI is still in the finalization stage, with the lead underwriter Morgan Stanley continuing efforts to secure investor commitments. The offering, which includes both floating and fixed rates, is expected to wrap up next week. However, many investors remain cautious given the uncertainty surrounding the company's rating and financial performance.
Elon Musk's xAI continues to work on attracting investors for its debt offering amidst the challenges facing the company. The future of this offering remains uncertain, but the new bond proposal and capital-raising plan may help improve the situation.
