Elon Musk is reportedly selling $5 billion in debt for his artificial intelligence business, xAI, to Morgan Stanley for a double-digit interest rate.
As Musk turns his attention back to managing his businesses and away from politics, this is the most recent in a series of fundraising initiatives across his company empire.
The action was taken soon after reports revealed that xAI is trying to sell $300 million worth of shares for a $113 billion valuation.
Musk's intentions to expand AI infrastructure, including as the creation of a data center in Memphis that he acquired in March and the growth of xAI's Colossus supercomputer, may be supported by the funding.
Early pricing negotiations point to a senior note yield of about 12 percent and a floating-rate loan rate that is 7 percentage points higher than the benchmark.
At more than $3.5 billion, the debt package has already attracted significant investor interest.
When xAI, which was founded less than two years ago, purchased X, Musk's social media network that was formerly known as Twitter, it made headlines earlier this year.
The AI firm has created Grok, a chatbot that competes with OpenAI's ChatGPT and is incorporated into X. Musk claimed at the time that the deal valued X at $33 billion and xAI at $80 billion.
A number of Musk-led businesses are aggressively seeking cash rounds, including xAI. His neurotechnology company, Neuralink, recently raised $650 million in addition to the $5 billion debt offering, and the secondary stock sale of xAI contributed an additional $300 million.
According to reports, demand for the debt auction has already exceeded $3.5 billion, demonstrating the ongoing interest in Musk's AI aspirations.
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The financing is being led by Morgan Stanley, a longtime supporter of Musk. Musk's $44 billion acquisition of Twitter in 2022 was originally advised by the bank, which has subsequently attempted to sell off the related debt, successfully clearing the final tranche this April.