The company has extended the deadline for investors to apply to buy the debt from Tuesday to Friday. Additionally, the annual interest rate on $3 billion in bonds and a $1 billion loan has been increased from 12% to 12.5%.
xAI has also raised the interest rate on another loan from about 7% to 7.25%, compared to the US daily credit rate. This loan will be sold at 96 cents on the dollar. Neither the company nor Morgan Stanley, which is leading the deal, has commented on the matter yet.
The average yield on high-yield bonds in the market is around 7.6%. Since xAI’s debt has not yet received a rating, investors do not have full insight into the company’s financial condition, and therefore consider the risk higher. This forces the company to offer higher interest rates.
If the deal is completed by Friday, Morgan Stanley will distribute the securities among investors on Monday.
Investors are cautious due to the conflict between Iran and Israel. It is still unknown whether the US will intervene in the region.
