can not come Tesla CEO Elon Musk Turns On Twitter Buying At an even worse time for the banks that will finance a large part of the $44 billion deal, they may face significant losses.
As with any major acquisition, banks may look to sell debt to remove it from their books. But investors have lost their appetite for riskier debt such as leveraged loans, spurred on by rapid increases in interest rates around the world, fears of recession and market volatility caused by Russia’s war on Ukraine.
While Musk is looking to secure $44 billion for his deal by selling a stake in the electric car maker Tesla and relying on equity financing from major investors, major banks have pledged $12.5 billion, according to Archyde.com and seen by Al Arabiya.net.
The list includes Morgan Stanley, Bank of America and Barclays.
Mitsubishi UFJ Financial Group, BNP Paribas, Mizuho Financial Group Inc and Societe Generale are also part of the alliance.
More than 10 bankers and industry analysts told Archyde.com, pointing to other big losses banks have incurred recently in debt financing, that the outlook was poor for banks trying to sell debt.
Twitter’s debt package consists of $6.5 billion in leveraged loans, $3 billion in secured bonds, and another $3 billion in unsecured bonds.
Leveraged funding sources had previously told Archyde.com that the potential losses of Wall Street banks involved in Twitter debt in such a market might reach hundreds of millions of dollars.
And just last week, a group of lenders were forced to cancel plans to sell $3.9 billion in debt that funded Apollo Global Management’s deal to buy telecom and broadband assets from Lumen Technologies Inc.
