Elon Musk’s acquisition of X, the social media giant formerly known as Twitter, is about to face a significant financial milestone. A consortium of major banks, led by Morgan Stanley, is gearing up to sell $3 billion in debt tied to Musk’s $44 billion buyout of the platform. The potential sale, slated for late January 2025, comes with high stakes for Musk, X, and the financial institutions involved. For many, this moment represents a critical test of market confidence in X’s direction under Musk’s ambitious leadership.

Key to this debt offering is its pricing strategy. The associated senior debt, being sold at a discounted rate of 90 to 95 cents on the dollar, is designed to attract institutional investors. To participate in the offering, a minimum investment threshold of $250 million has been set. By discounting the debt and appealing to well-capitalized investors, the banks aim to unload financial risk while incentivizing those who see long-term potential in the newly rebranded platform.

This move signals a pragmatic shift by Morgan Stanley and its partners to account for the debt-heavy nature of the buyout. The discounted pricing could be particularly attractive to investors willing to bet on X’s recovery and eventual profitability, despite ongoing questions about its current financial health.

The transformation of X into what Musk has described as an “everything app” has been bold, but it has not come without challenges. Since acquiring Twitter in late 2022, Musk has overseen significant restructuring efforts, from sweeping staff reductions to new revenue initiatives, such as paid subscription offerings. These initiatives reflect Musk’s high-risk, high-reward style of management.

However, the burden of the acquisition’s heavy debt load looms large. The deal was underpinned by substantial leveraged funding from major financial institutions including Morgan Stanley, leaving X with pressing financial obligations. As Musk works to turn X into a multi-functional platform, the success of the upcoming debt offering will be seen as a referendum on his ability to deliver sustainable growth.

The upcoming debt sale isn’t just significant for Musk and X—it also carries weight for the banks that helped finance the original acquisition. Morgan Stanley and its consortium face intense pressure to manage the financial overhang and mitigate potential losses. In essence, this sale represents a delicate balancing act: the banks want to move past the liabilities tied to Musk’s buyout without compromising confidence in their own financial stability.

Industry observers view the offering as a critical test for both X and the broader financial ecosystem. The discounted debt pricing reflects banks’ willingness to accept some losses, but it also creates a point of entry for investors who believe in Musk’s transformative vision for X. Skeptics may see it as a distress signal, while optimists view it as an opportunity to invest before a potential turnaround.

“This is a pivotal moment,” said one financial expert familiar with the matter. “The banks are taking calculated losses with the discount, but they’re also betting on institutional investors who share a long-term belief in Musk’s vision for X.