Previously, The Wall Street Journal reported that several banks had extended loans to Elon Musk to acquire the business of Twitter in 2022, negotiating with investors to sell discounted debts in order to reduce financial costs and risks for the banks.
The latest report reveals that a total of 7 banks, led by Morgan Stanley and Bank of America, have sold $13 billion in debt to investors at a discount, such as $0.98 per $1 of debt. While the banks may incur minor losses, they still benefit from transaction fees and previously paid interest. The final debt package sold had a value of $1.2 billion.
Analysts view the banks’ ability to offload this debt as positive news, considering the high risk of this loan portfolio to financial institutions. If Elon Musk delays or fails to repay the interest, the financial institutions still see potential for high returns from future projects. However, this doesn’t apply to X, which has now merged operations with xAI.
Source: The Wall Street Journal
TLDR: Banks offer discounted debt to Elon Musk for Twitter acquisition, reducing financial costs and risks, but potential for high returns remains uncertain.
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