STORY: Elon Musk’s U-turn on buying Twitter could not have come at a worse time for the banks funding a portion of the deal.
Experts say they look certain to face big losses as a result.
Lenders are providing about $12.5 billion of the $44 billion required to buy the social network.
That’s a mix of leveraged loans and other instruments.
Normally they’d sell the debt after the deal goes through, but market watchers say investors have lost their appetite for such risky bets.
Only recently, one group of banks lost $700 million selling debt backing the buyout of software company Citrix Systems.
Sources have told Reuters that losses on the Twitter deal could also run into hundreds of millions of dollars.
Banks on the hook include Morgan Stanley, Bank of America and Barclays.
Now there’s no easy way for them to dodge the bullet, with the financing tied in as part of the merger agreement.
Musk on Tuesday (October 4) dropped his own attempt to get out of the deal.
He gave no reason for the U-turn, but experts say his legal bid to cancel the takeover faced long odds.