xAI is scrambling to raise $5 billion in debt amid Elon Musk’s falling out with Donald Trump.
The issue started when Musk merged his social platform X with his AI company xAI earlier this year. Bloomberg revealed Musk’s plan to sell $5 billion in debt and $300 million in secondary stock to fund the combined business.
Soon after, tensions between Musk and Trump blew up on social media, just as Morgan Stanley was pitching xAI’s debt to investors. The Wall Street Journal says this clash created awkward timing during the sale. 
Morgan Stanley initially hoped to price the debt at par (100 cents on the dollar). Instead, traders saw it drop as low as 95 cents on the dollar on Thursday.
Investors are pushing back, and Morgan Stanley might have to sweeten the deal by offering higher interest rates to make it work.
The launch follows growing doubts about Musk’s handling of both companies and his public disputes pulling focus from the fundraising push.
This funding round will test if Musk’s tangled public drama impacts xAI’s financial backing.
