Elon Musk Twitter Deal Debt Reportedly Forces Banks to Hold On to it: Here’s Why

Teejay Boris, Tech Times 21 October 2022, 10:10 pm

The Elon Musk Twitter deal debt is now reportedly forcing banks, which financed the social media acquisition of the mega-billionaire tech entrepreneur, to hold on to it.

(Photo : Maja Hitij/Getty Images)
Tesla head Elon Musk talks to one visitor as he arrives to to have a look at the construction site of the new Tesla Gigafactory near Berlin on September 03, 2020 near Gruenheide, Germany. Musk is currently in Germany where he met with vaccine maker CureVac on Tuesday.

Sources reportedly familiar with the matter spilled that multiple banks have halted their plans to sell the debt to investors.

What could be the reason behind this move?

Elon Musk Twitter Deal Debt Forces Banks to Hold On

As per the latest news story by Reuters, the bank that finances the Twitter acquisition of Musk is reportedly holding on to the debt of the billionaire worth a staggering $13 billion. Banks helping in the deal include Morgan Stanley, Barclays, and Bank of America.

The news outlet reports that clandestine sources are saying that these banks would no longer sell the debt of Elon Musk to investors in the meantime.

Instead, these giant banking firms have reportedly decided to keep these billions of dollars in their balance sheets.

According to a recent report by The Verge, in cases such as this, banks usually sell debts to enter into a buyout. After this, these giant financial institutions move forward to another multi-billion deal.

However, the same could not be said for the Twitter deal of the Tesla and SpaceX chief executive officer (CEO).

The banks that helped finance the acquisition, such as Morgan Stanley, reportedly plan to hold on to the debt.

But how did these giant institutions come up with this decision?

Why Banks Have Been Forced to Hold On Twitter Deal Debt

Reuters says in the same report that sources are saying that these banks are looking to keep the $13 billion debt on their balance sheets. But when do they plan to sell it to investors?

(Photo : CHRIS DELMAS/AFP via Getty Images)
This illustration photo taken May 13, 2022, displays Elon Musks Twitter account with a Twitter logo in the background in Los Angeles. - Elon Musk sent mixed messages Friday about his proposed Twitter acquisition, pressuring shares of the microblogging platform amid skepticism on whether the deal will close.

The anonymous source adds that the banks are doing this in the meantime. However, once the investor appetite gets stronger, they would start selling the multi-billion debt of Musk.

But it is worth noting that these banks, including Bank of America, Morgan Stanley, and Barclays, have refused to confirm nor deny the move to hold on to the Twitter deal debt.

Meanwhile, The Verge notes in its story that these giant institutions have decided to put on hold the selling of the debt to investors due to the financial conditions.

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Written by Teejay Boris