It has been really hard for banks like Morgan Stanley, Bank of America, and Barclays to sell the debt required to do the Twitter deal due to Elon Musk’s antics. The Wall Street Journal reports that they’re just going to hold all $13 billion of it. New heights of “like a boss” are achieved here, as it threatens to bring leveraged buyouts to a screeching halt.
The reasons
A bank, typically, sells the debt used to create a buyout, and then moves on to the next deal. But since Musk has been playing boss, they can’t move on to the next deal. The WSJ put it, as “The Twitter move threatened to bring the stumbling leveraged-buyout pipeline to a standstill by tying up capital that the Wall Street could have otherwise used to back new deals.”
The appetite for Musk’s loan has decreased due to (waves in the direction of the Fed) financial conditions, which is part of the reason it is held. Although, most of it is Musk’s mercurial approach to the deal.
The implications
Although Mr. Musk and Twitter have until October 28 to complete the intended acquisition, there is still no assurance that the erratic billionaire will do so or that additional issues won’t develop. (If the agreement is not finalized by then, the two sides will appear in court in November.) Even if the banks decided to sell the debt now, they wouldn’t have enough time to offer it to outside investors, a procedure that often requires weeks.
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