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Banks offering $13 billion in financing for Tesla CEO Elon Musk's acquisition of Twitter Inc (TWTR.N) have abandoned plans to promote the debt to traders amid uncertainty over the company's fortunes and losses. social media. , people frequent with the depend said.
Banks are not planning to syndicate the debt as is common in such acquisitions, and are instead planning to keep it on their balance sheets, except there is more investor appetite, the sources pointed out.
The banks, which include Morgan Stanley, Bank of America, and Barclays Plc (BARC.L), declined to comment. Representatives for Musk and Twitter did not automatically respond to requests for comment.
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Musk agreed to pay US$44 billion for Twitter in April, before the Federal Reserve began raising interest rates in an attempt to combat inflation. This made the acquisition financing look very low in the eyes of credit score investors, so banks would have to take a monetary hit totaling tens of millions of dollars to get it off their books.
Furthermore, preventing banks from selling the debt turned into uncertainty regarding the completion of the deal. Musk tried to get out of the deal, arguing that Twitter misled him about the range of unsolicited mail debts on the platform, and agreed to a Delaware court closing date of October 28 to close the transaction earlier this month . He has now not printed details about Twitter's new leadership and business plan, and many debt brokers are holding back unless they get more details about this entry, the sources said.
The debt kit for Twitter's business is made up of rated loans, which can be dangerous due to the amount of debt the company is taking on, as well as secured and unsecured bonds.
Rising activity prices and greater market volatility have led traders to avoid some debt classified as junk. For example, Wall Street banks led by Bank of America suffered a loss of US$700 million in September from the sale of about US$4.5 billion in debt that backed the leveraged buyout of software company Citrix Programs Inc.
In September, several banks canceled efforts to promote about US$4 billion in debt that financed Apollo world management Inc's deal to buy telecom and broadband assets from Lumen Technologies after failing to locate consumers.
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Reporting via Anirban Sen and Shankar Ramakrishnan in Long Island; additional reporting by Sheila Dang, Abigail Summerville and Matt Tracy; Editing by Josie Kao
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