Elon Musk’s artificial intelligence startup, xAI, is expected to finalize a $5 billion debt raise this week, despite lukewarm interest from investors, according to sources familiar with the matter.

The financing package—led by Morgan Stanley—comprises a floating-rate term loan, a fixed-rate loan, and secured bonds. Allocation to investors is scheduled for Wednesday, said two individuals with knowledge of the deal who requested anonymity due to its private nature. xAI declined to comment, while Morgan Stanley also refrained from providing a statement.

The floating-rate loan reportedly carries an interest rate of 700 basis points over the Secured Overnight Financing Rate, while the fixed-rate components are expected to yield about 12%. These figures are notably higher than the current average yield of 7.6% on high-yield bonds, based on the ICE BofA High Yield Index. The premium reflects investor concerns over xAI’s unrated debt and lack of financial transparency.

At least three bond investors approached by the company have reportedly declined to participate. One cited xAI’s unprofitable status and comparisons to Musk’s controversial $44 billion acquisition of X (formerly Twitter) in 2022, where lenders struggled to offload $13 billion in debt for two years.

Despite completing the sale, the offering attracted only modest investor interest. Sources said demand was roughly 1.5 times the offering size—below the typical 2.5 to 3 times seen in similar junk bond deals.

Alongside the debt sale, xAI is also in discussions to raise up to $20 billion in equity financing, potentially valuing the company between $120 billion and $200 billion, according to earlier Reuters reports.