Bankers from Morgan Stanley have reached out to potential investors in anticipation of a sale scheduled for next week, the sources indicated.
The banks are projecting a recovery of 90 to 95 cents on the dollar, as reported by the Wall Street Journal, which was the first to disclose the impending sale.
Musk refuted the Journal's claims, labeling them as "false" and asserting on X that the publication was "lying."
The Journal referenced a January email sent to X employees in which Musk acknowledged ongoing financial challenges while highlighting the company's increasing power and influence.
In his post on X, Musk stated that he had "sent no such email."
Morgan Stanley, along with Bank of America and Barclays, provided financing to Musk for his $44 billion acquisition of X, previously known as Twitter, in 2022.
Requests for comments from Morgan Stanley, Bank of America, and Barclays went unanswered.
Typically, banks sell such loans to investors shortly after a transaction is finalized; however, they have encountered challenges in divesting the debt related to X.
Musk's extensive changes to the platform, including significant layoffs of content moderation staff, along with some of his posts on X, have deterred advertisers and negatively impacted revenue. This has diminished the debt's value as the likelihood of default has increased.
In November, Reuters reported that Musk's political connections and his relationship with former President Donald Trump led banks to reconsider the social media platform's prospects, potentially aiding in the sale of the debt without incurring substantial losses.
Previous attempts to sell the debt in late 2022 attracted bids that would have resulted in banks facing losses of up to 20% of the debt's face value, according to sources at that time.
Other banks involved in financing the deal include Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale.