The margin loans are one of the options that the Morgan Stanley-led bank group and Musk's advisers have discussed to ease the $13 billion debt Twitter took on as part of Musk's $44 billion deal, the report said, citing people with knowledge of the matter.
The discussions have so far centered around replacing the $3 billion of unsecured debt on which Twitter pays an interest rate of 11.75%, the maximum banks had agreed to finance the acquisition in April, the report said.
Morgan Stanley, Bank of America Corp, Barclays Plc and Mitsubishi UFJ Financial Group Inc led the $13 billion financing for the bid by Musk.
Tesla and Morgan Stanley did not immediately respond to a Reuters request for comment.
The banks are not expected to offload any of the Twitter debt to institutional investors until the new year, Bloomberg reported.
Reuters reported in October that banks had abandoned plans to sell the debt to investors because of uncertainty around Twitter's fortunes and losses.
Musk closed the deal with $13 billion in loans from banks and a $33.5 billion equity commitment, which included his 9.6% Twitter stake worth $4 billion and $7.1 billion from investors including Oracle Corp co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.
(Reporting by Sneha Bhowmik in Bengaluru; Editing by Nivedita Bhattacharjee and Dhanya Ann Thoppil)
