xAI: Why banks want to lighten its $18B debt

Today, I’m talking to you about a financial maneuver that could redefine the future of the Musk empire. The $18 billion debt accumulated by xAI is the subject of a vast restructuring operation orchestrated by Morgan Stanley and a consortium of elite banks.

This initiative comes in a major strategic context: the SpaceX-xAI merger announced for February 2026 and the long-awaited SpaceX IPO scheduled for the same year.

Far from a crisis situation, this is a strategic financial optimization designed to present a solid balance sheet to future investors. Let’s decode the behind-the-scenes of this major operation together.

An $18 billion debt weighing on the Musk empire

To understand where this mountain of debt comes from, we have to go back to the acquisition of Twitter in 2022. The $12.5 billion financing package mobilized for this operation makes up the bulk of this colossal debt.

Added to this are the massive investments made to rapidly develop xAI: infrastructure dedicated to artificial intelligence, construction of next-generation data centers, and recruitment of exceptional talent.

The concrete impact of this $18 billion debt? Monthly interest payments amounting to tens of millions of dollars. These recurring charges inevitably weigh on overall profitability and limit the capacity to invest in new projects.

This is the context for the SpaceX-xAI merger announced for February 2026. This operation will create a combined entity valued at $45 billion, including debt. This isn’t a financial bailout, but a strategic consolidation designed to strengthen Musk’s technological ecosystem.

Morgan Stanley at the forefront of restructuring the debt

When we talk about refinancing, what does that mean in concrete terms? It means renegotiating the terms of existing debt to obtain more favorable conditions. Morgan Stanley is expected to lead this major operation.

The goal is clear: reduce interest costs before the SpaceX IPO scheduled for 2026. A successful IPO requires a healthy and attractive balance sheet to win over institutional investors.

Morgan Stanley isn’t working alone on this case. A banking consortium made up of global financial heavyweights has been mobilized:

• Goldman Sachs
• Bank of America
• JPMorgan Chase & Co.

The timing of this operation is no coincidence. Refinancing would allow for longer debt maturities, better interest rates reflecting the current valuation of the merged entity, and above all, it would free up cash to fund future investments in AI and space exploration.

Musk’s complex journey through the debt markets

Musk isn’t the first entrepreneur to juggle billions in debt. The initial $12.5 billion package raised in 2022 for the acquisition of X (formerly Twitter) involved six major banking institutions.

The 6 creditor banks that still carry a significant portion of this debt on their books today are:

• Bank of America
• Barclays
• Mitsubishi UFJ Financial
• BNP Paribas
• Mizuho
• Société Générale

These financial institutions continue to collect monthly interest payments, but some have encountered difficulties reselling this debt on secondary markets. This mixed track record is explained by the atypical nature of the operation and the perceived volatility of the Musk ecosystem.

However, this situation is nothing exceptional for acquisitions of this magnitude. Corporate debt markets regularly see these types of configurations during transformational mega-deals.

The SpaceX-xAI merger, a strategic lever toward the IPO

A combined valuation of 45 billion

Beyond the numbers, this merger outlines a fully integrated ecosystem. The $45 billion valuation post-merger (including the $18 billion debt) reflects the combined potential of these two entities.

This operation creates unprecedented industrial synergies: Starlink brings its satellite communication infrastructure, xAI its computing power and AI algorithms, and SpaceX its mastery of space exploration and orbital logistics.

Want to understand all the implications of this operation? Check out the full details of this historic merger that could redefine the space and AI industries for decades to come.

The ability to pool financial and technological resources constitutes a major competitive advantage over traditional giants in the sector.

Long-term vision: AI in space

The most ambitious project of this merger? The development of orbital data centers powered by space-based solar energy, without Earth’s thermal and energy constraints.

Starlink becomes the communication infrastructure for xAI’s AI systems, allowing for instant global deployment. Conversely, xAI brings its algorithmic optimization capabilities to improve the management of SpaceX’s satellite constellations.

This cross-financing logic is already at work: revenues generated by Starlink (already profitable) can fund research and development on lunar and Martian programs, while xAI’s advances accelerate the automation of space operations.

Stakes and timeline for the SpaceX IPO

2026 is shaping up to be a pivotal year for the Musk empire. The official confirmation by Elon Musk himself places the IPO in 2026 as an unavoidable deadline. To learn more, check out Musk’s official announcement regarding this IPO.

Before this listing, it is imperative to clean up the balance sheet. Institutional investors scrutinize the debt structure of companies applying for an IPO. Optimized debt translates into a more attractive valuation and reinforced credibility on financial markets.

SpaceX occupies a unique strategic position in the Musk ecosystem. It is the only entity capable of generating massive short-term revenue thanks to NASA contracts, commercial launches, and especially Starlink subscriptions, which are exploding.

This IPO could become one of the most significant of the decade, potentially surpassing recent listings by tech giants. SpaceX would become the financial catalyst allowing for the simultaneous acceleration of Tesla and xAI development.

Key takeaways from this restructuring

Here’s where we stand today: $18 billion to refinance, an IPO scheduled for 2026, and a strategic merger that repositions the entire Musk ecosystem on the markets.

For Tesla fans and Musk universe enthusiasts like you, this operation has indirect repercussions for Tesla. Financial consolidation allows Musk to better focus his attention on each company in his portfolio, notably Tesla’s investment in xAI, which strengthens technological synergies.

According to specialized financial sources, this type of restructuring before a major IPO is common practice to optimize valuation and reassure institutional investors about the company’s financial solidity.

The Musk ecosystem is strengthening overall, with ever-deeper interconnections between SpaceX, xAI, Tesla, and X. It remains to be seen if the markets will welcome this IPO with as much enthusiasm as Musk’s previous ventures…