皇冠买球网:Banks face US$500mil loss on Twitter debt
Problematic deal: Pedestrians outside Twitter headquarters in San Francisco, California. The banks have agreed to fund the purchase whether or not they are able to offload the debt to outside investors. — Bloomberg皇冠买球网（www.hg108.vip）是皇冠体育官网线上直营平台。皇冠买球网面向亚太地区招募代理，开放皇冠信用网代理申请、皇冠现金网代理会员开户等业务。皇冠买球网可下载皇冠官方APP，皇冠买球网APP包括皇冠体育最新代理登录线路、皇冠体育最新会员登录线路。
NEW YORK: When banks led by Morgan Stanley agreed in April to help finance Elon Musk’s purchase of Twitter Inc, they were eager to aid an important client, the richest person in the world. Now neither Musk nor the banks have an obvious way to wriggle out of it.
Lenders that also include Bank of America Corp, Barclays Plc and Mitsubishi UFJ Financial Group Inc (MUFG) committed to provide US$13bil (RM60bil) of debt financing for the deal.
Their losses would amount to US$500mil (RM2.3bil) or more if the debt were to be sold now, according to Bloomberg calculations.
They agreed to fund the purchase whether or not they were able to offload the debt to outside investors, according to public documents and lawyers who have looked at them. “I think that those banks would like to get out of it, I think the deal makes less sense for them now, and that the debt will be harder to syndicate to investors,” said Howard Fischer, partner at law firm Moses Singer.
But Fischer, a former senior trial counsel at the Securities and Exchange Commission who isn’t involved in Twitter, said there’s no legal basis for them to back out.
Junk bond and leveraged loan yields have surged since April, meaning that banks will lose money from having agreed to provide financing at lower yields than the market will accept now.
Any pain the banks bear from this deal comes as lenders have already sustained billions of dollars of writedowns and losses this year after central banks worldwide have started hiking rates to tame inflation.,
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Even if the banks could find buyers for Twitter debt in the market now, which is far from certain, selling bonds and loans tied to the deal probably wouldn’t be possible before the buyout closes.
Banks have a pipeline of around US$50bil (RM232bil) of debt financing they’ve committed to provide in the coming months, according to Deutsche Bank AG estimates.
While usually banks would sell bonds and loans to fund those deals, investors are less eager to buy now than they were toward the beginning of the year, and offloading this debt will be hard.
That’s forcing banks to provide the financing themselves on a number of deals, a strain on their earnings and capital requirements.
For example, lenders including Bank of America and Barclays expect to have to fund US$8.35bil (RM39bil) of debt for the leveraged buyout of Nielsen Holdings this week, Bloomberg reported last Tuesday.
Representatives for Morgan Stanley, Bank of America, Barclays, MUFG and Twitter declined to comment.
A representative for Musk did not immediately respond to a request for comment.
Banks may not be able to back out of the Twitter deal, but Musk has been trying to.,