Major US and foreign banks stand to suffer losses of $500 million or more if they follow their commitment to finance Elon Musk's $44 billion acquisition of Twitter, a report said. "If the debt were to be sold now" it would lead to a collective loss of $500 million or more, a Bloomberg report said.
The banks which are led by Morgan Stanley, Barclays and Bank of America, had pledged to raise $13 billion in debt to finance Elon Musk's purchase of Twitter. As this commitment was unconditional, the banks will have to sell their debt to investors no matter what, the report said.
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When the banks had agreed to finance the Musk-Twitter deal in April, they had done so on terms with lower returns. But owing to the worsening of credit markets due to higher interest rates amid record inflation, the situation could result in write-downs, the report said.
“I think that those banks would like to get out of it, I think the deal makes less sense for them now, and that the debt will be harder to syndicate to investors,” Howard Fischer of Moses Singler law firm told Bloomberg.
{{/usCountry}}“I think that those banks would like to get out of it, I think the deal makes less sense for them now, and that the debt will be harder to syndicate to investors,” Howard Fischer of Moses Singler law firm told Bloomberg.
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This comes after Elon Musk abruptly abandoned his three-month attempt to end the Twitter agreement. Initially, the billionaire had blamed bot accounts on the platform as a reason for his disinterest in the deal but the legal challenges that he faced following his backing off resulted in him agreeing to the buyout of the social media platform.