Wall Street banks finally got rid of the debt tied to Elon Musk’s 2022 buyout of the social media platform now known as X.

Investors purchased the remaining $1.2 billion in loans on Monday from a group of big banks led by Morgan Stanley (MS) that included Bank of America (BAC) for roughly $0.98 on the dollar, according to a person familiar with the matter.

The Wall Street Journal reported earlier on the banks’ final sale of the debt.

Big banks fronted roughly $13 billion in financing in 2022 when Musk bought Twitter, a social media platform he renamed X, for $44 billion. The financing included a $500 million revolving credit facility. 

REUTERS / Reuters

But those loans lost value as X struggled, and the banks weren’t able to get them off their books without taking significant losses.

Holding such debt for an extended period can be a substantial drag on banks' regulatory capital requirements, reducing their capacity to finance new buyout deals.

In January, the group began sounding out investors about their interest in purchasing portions of the debt initially provided to Musk in 2022 to take over the social media platform now known as X.

The hope was that future prospects for X were seen as rosier given Musk’s close alliance with President Trump. The banks were also remiss in losing such a client as Musk, the world’s richest man.

After all, Musk owns several private companies that may one day go public through an initial public offering, including rocket and satellite company SpaceX (SPAX.PVT), which has an estimated value of $387 billion, according to Yahoo Finance data.

Banks sold a $1 billion portion of the debt that month for approximately $0.95 on the dollar.

Reuters / Reuters

They quickly followed that up with another sale in early February for a $5.5 billion portion at $0.98 on the dollar. Later in February, the lenders sold a larger $4.7 billion portion at par.

Crucial to the success of the sale was Musk’s decision for his newer artificial intelligence company xAI to acquire the social media platform’s parent company X Corp in an all-stock transaction.

When Musk announced the merger of his two companies in late March, he said that their combined value was $80 billion.

During the two and half years they held onto the X debt, banks did earn a steady stream of interest payments. That amount hasn’t been disclosed. Back in February, an estimate by Bloomberg put their collective interest income from the loans in the billions.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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