Banks forced to hold on to debt from Twitter deal: Report

Elon Musk vs. Twitter: Reports indicate that the banks do not intend to syndicate the debt, as is customary with such acquisitions.

Due to the uncertainty surrounding Twitter Inc.’s profits and losses, the banks providing the $13 billion in financing for Tesla CEO Elon Musk’s acquisition of the social media business have abandoned plans to sell the debt to investors, according to people familiar with the situation.

According to the sources, the banks do not intend to syndicate the debt, as is common with such acquisitions, and instead intend to keep it on their balance sheets until there is increased investor interest.


Requests for comment from the banks, which also include Morgan Stanley and Barclays Plc, went unanswered. Bank of America opted against commenting. Requests for response were not immediately answered by Musk or Twitter representatives.

In April, before the Federal Reserve began hiking interest rates to combat inflation, Musk agreed to pay $44 billion for Twitter. The banks would have to suffer a financial damage totaling hundreds of millions of dollars to get the purchase financing off their books because this made the acquisition financing appear too cheap in the eyes of credit investors.

Uncertainty regarding the deal’s completion prevented the banks from promoting the debt as well. Musk has attempted to back out of the agreement, claiming Twitter deceived him about the volume of spam accounts on the network. He only decided to follow a Delaware court judge’s order earlier this month to complete the transaction by the deadline of October 28. Many debt investors are holding off until they receive more information on Twitter’s new leadership and business plan, according to the sources, because he has not yet provided any details.

The dangerous junk-rated loans, secured and unsecured bonds, and the amount of debt the corporation is taking on make up the debt package for the Twitter transaction.

Investors are being urged to steer clear of some junk-rated securities due to rising interest rates and general market instability. For instance, the selling of the $4.55 billion in debt used to support the leveraged buyout of Citrix Systems Inc. by Wall Street banks led by Bank of America resulted in a $700 million loss.

After failing to find buyers, a group of banks abandoned efforts to sell $4 billion in debt that had been used to finance Apollo Global Management Inc.’s acquisition of telecom and internet assets from Lumen Technologies in September.