Elon Musk’s artificial intelligence venture xAI is preparing to pay off $3 billion worth of high-yield bonds before they’re due, Bloomberg News reported Monday, according to sources familiar with the situation.
Companies that choose to settle their debt obligations ahead of the original timeline typically face penalties and must cover the interest payments that lenders anticipated earning throughout the full agreed-upon term.
The bond values surged approximately three points Monday, reaching around $1.17 per dollar, Bloomberg reported based on Trace pricing information. These securities were initially issued in June 2025 under terms suggesting the debt would stay active for no less than two years.
Last year, Morgan Stanley spearheaded a $5 billion financing package for xAI, which included both high-yield bonds and loans intended to support the company’s rapid growth in the artificial intelligence sector.
SpaceX completed its acquisition of the AI startup in February through a landmark transaction that placed xAI’s worth at $250 billion, providing the space company with enhanced ability to reorganize xAI’s financial structure.
The rocket manufacturer is gearing up for a major initial public offering later this year that could reach a valuation exceeding $1.5 trillion.
Given that the merged entity carries substantial debt obligations, financial advisors have been developing a funding strategy aimed at reducing some of the expensive interest burdens both companies have accumulated in recent years, according to the Bloomberg report.
Neither xAI nor Morgan Stanley provided immediate responses to requests for comment. Reuters was unable to independently confirm the report.
