*

Banks sell $4.74 billion secured debt; hold small

unsecured

portion

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New secured loan sale prices at par; pays fixed-rate

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Timing of sale of balance loan with banks unclear

(Updates with bank responses)

By Shankar Ramakrishnan

Feb 14 (Reuters) - Banks led by Morgan Stanley ( MS )

have sold to investors another chunky portion of loans that

formed the $13 billion debt supporting Elon Musk's $44 billion

acquisition of Twitter, now X, in 2022, a source with knowledge

of the deal said.

On Thursday, they completed the secondary sale of $4.74

billion of secured loans which mature in October 2029. The loans

paid a fixed rate yield of 9.5% and priced at par or at 100

cents to the dollar, said the source. The loan sale was upsized

from an initial $2.97 billion.

With the latest sale, the banks - that besides Morgan

Stanley ( MS ) includes Bank of America ( BAC ), Barclays ( JJCTF ),

Mitsubishi UFJ, BNP Paribas, Mizuho,

and Societe Generale - have been able to shed almost

all of the $13 billion they have been holding on their books for

nearly two years.

The X acquisition was funded by a $6.5 billion secured term

loan, a $500 million revolving credit facility, $3 billion

unsecured loan and $3 billion of secured loans.

The timing of the sale of a balance $1.3 billion in

unsecured loans still with the banks is unclear, said the

source.

In early February, the banks sold $5.5 billion of a term

loan which came after a separate $1 billion private sale of the

same loans, the source said.

That loan was priced with a floating rate of interest at 97

cents to the dollar and an initial yield of 11%.

The latest tranche to be sold was a fixed-rate loan which is

rare and the largest-ever, according to an International

Financing Review report.

The first source said the deal found broad interest from

large fund managers who were attracted by the prospect of

improving revenues of X after Trump's election victory in

November and Musk's emergence as a close aide to the new

president.

Banks typically sell such loans to investors soon after the

deal is done, but in the case of X, they have been stuck holding

it for two years.

The first tranche of loans sold were bid higher than their

97 cents to the dollar pricing, according to one trader source,

which could have helped the sale of the latest tranche.

One selling point was that investors will gain exposure to

X's stake in Musk's artificial intelligence startup xAI, the

source said.

Barclays ( JJCTF ), BNP Paribas, Mizuho, Societe Generale declined to

comment and other banks did not immediately respond to a request

for comment.