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Wall Street banks saddled with debt from Elon Musk’s $44bn takeover of Twitter sold large chunks of the loan package to investors on Wednesday, allowing a number of lenders to exit one of the toughest acquisition financings in recent years.
The banks were able to sell $5.5bn of term loans, following a sale of roughly $1bn of the same debt last month, helped by booming investor interest in the assets, according to people briefed on the matter. The debt sold on Wednesday was offloaded with just a small discount, selling at 97 cents on the dollar.
The transaction was a pivotal moment for the banks, which had to fund Musk’s 2022 takeover themselves after his ownership of the business, now renamed X, and broader market volatility damped enthusiasm for the debt.
“I don’t want to sugarcoat it, the banks did not want to be in this position,” one person involved in the deal said.
Banks, led by Morgan Stanley, Bank of America and Barclays, are now left holding a further $6bn of debt tied to the acquisition, which is considered even riskier than the loans they sold over the past week. MUFG, BNP Paribas, Mizuho and Société Générale had also participated in the deal.
BofA, Morgan Stanley, Barclays, BNP Paribas and SocGen declined to comment, while the two other banks did not respond to requests for comment.
The debt sales, including the loans sold in January, have attracted a broad list of high-profile groups, including Citadel, Apollo Global Management, Pimco and Diameter Capital. The groups declined to comment.
Investor appetite in the Twitter debt was bolstered by Musk’s relationship with US President Donald Trump as well as the return of some of the advertisers who had previously pulled back from the platform, people familiar with the deal said.
That has proved to be a saving grace for the banks that stepped up to finance the transaction, given some hedge funds had offered Morgan Stanley and others just 60 cents on the dollar in 2023 to take the debt off their hands.
One money manager who passed on the deal added that it was a good time for the banks to sell, pointing to “Elon’s cachet. He is an FOP, a friend of the president.”
Investors were also wooed by the company’s stake in Musk’s artificial intelligence company xAI, which the Financial Times reported last year was valued at $50bn. That helped assuage concerns over X’s own valuation and the ability of the company to service its debts.
Morgan Stanley, Musk’s lead banker, put forward the deal at an opportune time — given debt investors have largely been starved of new buyouts to help finance.
The bank limited the parties who could access X’s financial information or join for a meeting with top X leaders including chief executive Linda Yaccarino to those who were willing to write sizeable cheques. For some investors, that drove a sense of urgency.
The debt carries an interest rate more than 6 percentage points over the floating rate benchmark, or more than 11 per cent, according to a person briefed on that matter. With the discount, the yield topped 12 per cent, according credit monitoring service LevFin Insights.
That was a huge draw for investors, given yields on risky corporate debt have slid back towards their lowest level since 2022, data from ICE Data Services shows.
Additional reporting by Harriet Agnew in London
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