Banks are required to withhold sources of debt from the Twitter acquisition

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  • The bank that funded Tesla CEO Elon Musk’s $13 billion purchase of Twitter has said it has said it will continue to do so amid uncertainty over social media chief Elon Musk’s fortunes and losses. It has scrapped plans to sell debt to investors, people familiar with the matter said.

The bank has no plans to syndicate the debt, as is often the case with such acquisitions, and instead plans to keep it on its balance sheet until investor interest grows. Both banks, including Morgan Stanley and Barclays, did not respond to requests for comment. Bank of America declined to comment.

Musk and his Twitter representative did not immediately respond to a request for comment. Musk agreed to pay Twitter $44 billion in April before the Federal Reserve began raising rates to fight inflation. This made the acquisition fund look too cheap in the eyes of credit investors, and banks had to take hundreds of millions of dollars in economic hits to get it off the books.

Uncertainty about transaction completion also prevented banks from selling debt. Musk attempted to go out of business after claiming Twitter misled him about the number of spam accounts on the platform, agreeing to meet a judge’s Oct. 28 deadline to complete the deal earlier this month. . He did not provide details about Twitter’s new leadership and business plans, and many fixed income investors are holding off until more information is available on that front.

In September, the banking group abandoned an effort to sell about $4 billion of debt in Apollo Global Management Inc’s contract to buy telecommunications and broadband assets from Lumen Technologies after it was unable to find a buyer.

The Twitter deal’s debt package consists of junk-rated loans and secured and unsecured corporate bonds, which are high-risk given the amount of debt the company has taken on. Rising interest rates and increased market volatility have led investors to avoid some junk-rated bonds. For example, in September, Wall Street banks, led by Bank of America, sold about $4.55 billion of debt to support his buyout of leveraged enterprise software firm Citrix Systems Inc. It suffered a loss of $700 million.

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