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Banks led by Morgan Stanley could lose about $500 million in efforts to fund Elon Musk’s $44 billion Twitter acquisition (NYSE:TWTR) as debt markets have boiled over in recent months.
Lenders include Morgan Stanley (TEACHER) Bank of America Corp. (BAC) Barclays Plc (BCS) and Mitsubishi UFJ initially committed $13 billion in debt financing for the transaction.
These banks could now lose about $500 million if they had to sell the debt now, according to Bloomberg calculations in one Friday’s End Story. Initially, they agreed to finance this purchase even if they could not sell the debt, and now investors are unlikely to want to buy the debt in the current market.
The report appears as Twitter’s (TWTR) the trial forced Elon Musk to go through a $44 billion buyout has been paused until October 28 The Delaware judge presiding over the case ruled on Thursday to allow the parties to close the settlement.
Banks have been hit in the debt market in other major deals in recent weeks. Bloomberg reported on Tuesday that banks including BofA (BAC) and Barclays (BCS) are expected funding Nielsen’s $8.35 billion purchase (NLSN) by Elliott Management and Brookfield Business Partners, is scheduled to close this week.
There is also a high probability that banks, including Citi (OLD) and BofA (BAC) would need to finance a debt of more than $5 billion for Apollo’s (ONE PO) plan to acquire Tenneco (TEN), as reported by Bloomberg.
And last month, banks were reportedly shelling out to sell Citrix Systems $16.5 billion to Elliott and Vista Equity, where the underwriters supporting the deal are suffering losses of 500 million dollars when the debt is paid discount auction.
