When Morgan Stanley launched the debt offering early last week, it already had more than $3.5 billion in orders. Some investors took that as a sign that the deal would soon be oversubscribed, a goal that has been easily exceeded for other Musk-related offerings. As of Monday, though, demand had only risen to around $5 billion and the bank began reaching out to smaller lenders who had not been given access last week, according to people familiar with the deal.

The firm still intends to finalize the investor list by June 17 as originally planned. Typically, banks want demand to be substantially higher than the actual deal size so they have more flexibility on pricing and terms.

Morgan Stanley declined to comment. xAI did not immediately respond to a request for comment.

The effort to borrow money for xAI, which is now worth $94 billion, offers one of the first indications of how the rift between Trump and Musk might hit Musk’s broader network of private companies, which includes SpaceX and Neuralink. The market value of his biggest company, Tesla Inc., has fallen $42 billion since last Thursday when Musk and Trump took aim at each other on social media, recovering in the last couple of days from a steeper drop as tensions simmered down.

The debt package includes a floating-rate term loan, a fixed-rate term loan and senior secured notes. Official price talk emerged Tuesday at a yield of about 12% on the notes and fixed-rate loan, according to people with knowledge of the matter, in line with levels previously reported by Bloomberg.

The floating-rate loan is being discussed at 7 percentage points above the Secured Overnight Financing Rate, and a discounted price of 97 cents on the dollar, the people said.

Some investors said they expected the company would have to hike yields to close the deal, people familiar with the negotiations said.

Musk recently merged xAI with his social-networking platform X, formerly known as Twitter Inc., into a combined company called XAI Holdings.