US banks have abandoned plans to sell debt to Twitter investors due to uncertainty.
San Francisco:
Banks that provided $13 billion in financing for Tesla CEO Elon Musk’s acquisition of Twitter Inc. have abandoned a plan to sell debt to investors because of uncertainty about the social media company’s fortunes and losses, according to people familiar with the matter. people said.
Sources said banks are not planning to syndicate debt, as happens with such acquisitions, and are instead planning to keep it on their balance sheets, unless there is more investor appetite. .
The banks, which include Morgan Stanley and Barclays Plc, did not respond to requests for comment. Bank of America declined to comment. Representatives for Musk and Twitter did not immediately respond to requests for comment.
Musk agreed to pay $44 billion to Twitter in April, before the Federal Reserve began raising interest rates to fight inflation. This made acquisition financing much cheaper in the eyes of credit investors, so banks would have to incur financial losses totaling hundreds of millions of dollars to remove it from their books.
Also there was uncertainty around the completion of the deal preventing banks from marketing the loans. Musk tried to walk out of the deal, arguing that Twitter misled him about the number of spam accounts on the platform, and only asked a Delaware court judge 28 to close the transaction earlier this month. Agreed to adhere to the October deadline. Sources said they did not disclose details on Twitter’s new leadership and business plan, and many debt investors are holding back until more information is received on that front.
The loan package for the Twitter deal includes junk-rated loans, which are riskier because of how much debt the company is carrying, as well as secured and unsecured bonds.
Rising interest rates and wider market volatility have prompted investors to stay away from some junk-rated debt. For example, Wall Street banks led by Bank of America lost $700 million in September on the sale of approximately $4.55 billion of debt in support of a leveraged buyout of business software company Citrix Systems Inc.
In September, a group of banks scrapped efforts to sell nearly $4 billion in debt that financed Apollo Global Management Inc.’s deal to buy telecommunications and broadband assets from Lumen Technologies after failing to find buyers. did.
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