X.AI’s $5B Capital Stack: Musk’s AI Bet Draws Deep Credit Appetite—At a Price

X.AI Corp., the AI venture founded by Elon Musk, is finalizing terms for a $5 billion three-part capital raise that blends leveraged loan mechanics with high-yield muscle.

The structure:
– $1B Floating-Rate Term Loan B (5-year, non-call 1)
– $1B Fixed-Rate Term Loan (5-year)
– $3B Senior Secured Notes (5-year, non-call 2)

Morgan Stanley is lead left on the deal, which will close books at 1 p.m. EDT on June 20 after revised pricing terms widened spreads in response to investor feedback.

Repricing the Risk: A Closer Look at the Terms

  • Term Loan B:

    • Price talk revised to S+725 (from +700)

    • OID cut to 96 (from 97)

    • Callable at 101/103, with token 1% amort.

  • Fixed-Rate Term Loan + Bonds:

    • Now at 12.5% coupon at par, up from 12%

    • Senior notes issued under Rule 144A / 4(a)(2)

    • First call after 2 years, at par + 50% coupon

The market is asking for more yield, and X.AI is obliging—signaling both strong appetite and recognized structural risk.

Strategic Context: The X.AI Playbook

X.AI is not just another AI company. It’s a converging force of AI + media + Musk.

  • Grok, its flagship conversational AI, is Musk’s answer to ChatGPT.

  • In March, X.AI completed an all-stock acquisition of X Corp. (Twitter) at a $33B valuation (ex-debt), effectively folding social media distribution into its AI vertical stack.

The current financing is designed to fuel this multi-industry convergence—from foundational models to end-user platforms—under one capital structure.

What This Really Means

  1. AI Capital Structures Are Evolving

    Musk is blending traditional LBO mechanics with venture-level growth projections. This is rarefied territory—venture-scale ambition with debt market discipline.

  2. Yield-Hungry Markets Are Still Selective

    The widening spreads and revised OID reflect investor caution—especially on non-revenue-generating AI platforms with large burn rates.

  3. A Move Toward Integrated Ecosystems

    This isn’t just an AI raise—it’s a platform consolidation move. Owning both distribution (X/Twitter) and infrastructure (Grok) gives X.AI a unique defensibility.

  4. High-Yield with High-Profile

    Few names can command $5B in secured debt without a commercial product. Musk’s personal brand and asymmetric vision are underwriting part of this deal.

AI is Getting Leveraged—and Institutional Credit is Listening

As X.AI shows, the AI funding playbook is no longer limited to equity. We're entering a cycle where frontier tech companies access capital with creative, multi-layered structures—and investors price in both the genius and the gamble.