NEW YORK
\nThe banks providing $13 billion in financing for Tesla CEO Elon Musk\u2019s acquisition of Twitter have abandoned plans to sell the debt to investors because of uncertainty around the social media company\u2019s fortunes and losses, people familiar with the matter said.
\nThe banks are not planning to syndicate the debt as is typical with such acquisitions, and are instead planning to keep it on their balance sheets until there is more investor appetite, the sources said.
\nThe banks, which include Morgan Stanley, Bank of America, and Barclays Plc, declined to comment. Representatives for Musk and Twitter did not immediately respond to requests for comment.
\nMusk agreed to pay $44 billion for Twitter in April, before the Federal Reserve started raising interest rates in a bid to fight inflation.
\nThis made the acquisition financing look too cheap in the eyes of credit investors, so the banks would have to take a financial hit totaling hundreds of millions of dollars to get it off their books.
\nAlso preventing the banks from marketing the debt was uncertainty around the deal\u2019s completion. Musk has tried to get out of the deal, arguing Twitter misled him over the number of spam accounts on the platform, and only agreed to comply with a Delaware court judge\u2019s Oct. 28 deadline to close the transaction earlier this month. He has not revealed details on Twitter\u2019s new leadership and business plan, and many debt investors are holding back until they get more details on that front, the sources said.
\nThe debt package for the Twitter deal is comprised of junk-rated loans, which are risky because of the amount of debt the company is taking on, as well as secured and unsecured bonds.
\nRising interest rates and broader market volatility has pushed investors to stay away from some junk-rated debt. For example, Wall Street banks led by Bank of America suffered a $700 million loss in September on the sale of about $4.55 billion in debt backing the leveraged buyout of business software company Citrix Systems Inc.
\nIn September, a group of banks cancelled efforts to sell about $4 billion of debt that financed Apollo Global Management Inc\u2019s deal to buy telecom and broadband assets from Lumen Technologies after failing to find buyers.<\/p>\n","protected":false},"excerpt":{"rendered":"
NEW YORK The banks providing $13 billion in financing for Tesla CEO Elon Musk\u2019s acquisition of Twitter have abandoned plans to sell the debt to investors because of uncertainty around the social media company\u2019s fortunes and losses, people familiar with the matter said. The banks are not planning to syndicate the debt as is typical […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-291005","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n