• Musk’s Twitter deal could leave banks holding $13 billion in debt, The Wall Street Journal reported.
  • That would make it the biggest “hung” deal and mean lenders may sell the debt when markets rebound.
  • Banks involved in the $44 billion takeover include Morgan Stanley, Bank of America, and Barclays.

Elon Musk’s Twitter deal could leave banks stuck with $13 billion in debt, making it the biggest stalled deal on record. 

People familiar with the matter told The Wall Street Journal that lenders helping to fund the $44 billion deal, including Morgan Stanley, Bank of America, and Barclays, do not plan to sell the debt immediately to avoid losses of at least $500 million. 

The Journal reported that if all the banks took such an option they could sell it at a higher value when prices rebound.

That means it could be the biggest stalled deal ever, eclipsing the billions of debt lenders were stuck with after the 2008 financial crisis. 

The banks agreed to provide debt for Musk earlier this year before investors had been found as is custom in leveraged buyouts.

Rising interest rates and a looming recession planted seeds of doubt and Musk’s public criticism of Twitter didn’t help the process, according to The Journal.

Time is another factor as Musk and Twitter must close the deal by October 28 or face going to court in November. 

Banks hope to sell some of the debt in early 2023, assuming the deal closes and market prices improve, sources told the newspaper. One person who spoke to the Journal said the debt could be divided up to make it easier to sell. 

Morgan Stanley, Bank of America, and Barclays did not immediately respond to Insider’s request for comment.

Musk’s takeover has sparked criticism and concerns. Employees have left the company ahead of the deal closing, and Twitter has denied reports that the world’s richest man planned to cut 75% of its workforce.

Meanwhile, the US government is considering a national security review of the acquisition, meaning President Joe Biden could ultimately kill the deal.

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