Elon Musk’s acquisition of Twitter has resulted in the worst bank financing deal since the 2008 financial crisis, according to The Wall Street Journal.
– Musk secured $13 billion in loans for this deal, which remain on the balance sheets of seven major banks including Morgan Stanley, Bank of America, and Barclays.
– Typically, banks quickly offload such loans, but they have been stuck for 22 months, marking the longest unsold debt financing since the Great Financial Crisis.
– Despite Musk’s prominence and wealth making the deal appealing, the loans have become a significant burden, forcing banks to write down their value.
– This debt has restricted banks’ capacities to finance other deals and even affected banker compensation, with M&A bankers facing a 40% pay cut in 2023.
– While the banks receive interest payments, they anticipate a collective loss of approximately $2 billion if Twitter fails to repay the loans upon maturity.
– Financial reports indicate that Twitter’s revenue dropped 40% to $1.48 billion in the first half of 2023, underscoring the company’s ongoing struggles despite Musk’s changes.