Unlock the digestive of free editor
Roula Khalaf, the FT editor, chooses her favorite stories in this weekly newsletter.
Wall Street banks saddled with the debt from taking on Twitter $ 44 billion of Elon Musk, Twitter sold large pieces of credit package for Wednesday, allowing a number of lenders to emerge from one of the most difficult funding of buying in recent years.
Banks were able to sell $ 5.5 billion time loan after a $ 1bN sale of the same debt last month, assisted by the interest of booming investors for assets, according to people informed on the matter. The debt sold Wednesday was loaded with only a small discount, selling 97 cents in the dollar.
The transaction was an important moment for banks, which had to finance the 2022 Music’s receipt of its business ownership, now renamed X, and the wider market instability was enthusiastic about debt.
“I don’t want to wear it with sugar, the banks didn’t want to be in this position,” said one person involved in the deal.
Banks, led by Morgan Stanley, the Bank of America and Barclays, have now remained holding a further $ 6 billion -in -buying debt, which is considered even more dangerous than the loans they sold over the past week. Mufg, BNP Paribas, Mizuho and Société Générale had also participated in the agreement.
Bofa, Morgan Stanley, Barclays, BNP Paribas and Socgen refused to comment, while the other two banks did not respond to commentary requests.
Debt sales, including loans sold in January, have withdrawn a wide list of high -profile groups, including Citadel, Apollo Global Management, Pimco and Diameter Capital. The groups refused to comment.
The investors’ opetite in Twitter debt was strengthened by Musk’s relationship with US President Donald Trump, as well as the return of some of the advertisers previously withdrawn from the platform, people acquainted with the deal.
This has proven to be a grace of saving for banks that grew up to finance the transaction, given some protective funds had offered Morgan Stanley and only 60 cents in the dollar in 2023 to remove debt from their hands.
A money manager who went through the deal added that it was a good time for banks to sell, showing “Elon’s cache”. He is a fop, a friend of the president. “
Investors were also fooled by the company’s shares at Musk Xai’s artificial intelligence company, which the Financial Times reported last year was estimated at $ 50BN. This helped confirm concerns about the X self assessment and the company’s ability to serve its debts.
Morgan Stanley, Musk’s main banker, presented the deal at an appropriate time – given that debt investors have been largely hungry from new purchases to assist in finances.
The bank restricted the parties that could enter the X financial information or join for a meeting with Top X executives, including the chief executive Linda Yaccarino for those who were willing to write considerable controls. For some investors, this prompted a sense of urgency.
Debt carries an interest rate more than 6 percentage points above the standard of floating rate, or more than 11 percent, according to a person informed on the matter. With the deduction, the yield reached 12 percent, according to the Levfin Insights Credit Monitoring Service.
This was a major draw for investors, given the yields of dangerous corporate debt have been dropped again to their lowest level since 2022, data from ICE data services show.
Additional report by Harriet Agnew in London
