WSJ: “Loan of $13 billion expected to result in at least 15% loss”
The Wall Street Journal (WSJ) reported on the 25th that banks that financed Tesla CEO Elon Musk’s acquisition of social media Twitter (now (local time) reported.
According to WSJ, seven banks, including Morgan Stanley, Bank of America (BofA), Barclays, Mitsubishi UFJ Financial (MUFG), BNP Paribas, Societe Generale, and Mizuho, invested about $13 billion when Musk acquired Twitter a year ago. (approximately 17.67 trillion won) was lent.
Under normal circumstances, this debt would have been repaid shortly, but after Musk changed the Twitter company name to
WSJ, citing sources familiar with the matter, said banks expect to lose at least 15%, or about $2 billion, if they sell their debt.
Banks had hoped to sell the bonds by early last month, but only recently were they able to begin preparations for partial disposal.
In order to sell bonds, you must secure a credit rating from a credit rating agency such as Moody’s or S&P. If X gets a low credit rating, banks will have to take bigger losses than expected.
Banking officials believe that X may receive a ‘junk bond’ rating, a bond not suitable for investment, due to Musk’s erratic management and weakening advertising market. Before the Musk acquisition, Twitter received a junk bond rating despite having much less debt than it does now.
Banks expected to earn tens of millions of dollars in fees from trading with
As regulators are intensively inspecting banks’ financial status due to the bankruptcy of Silicon Valley Bank (SVB) early this year, the longer X bonds are held, the stronger the investigation and the higher the likelihood of disadvantages to the bank.
Musk has cut thousands of jobs and other expenses to cover the massive interest payments on the debt. CEO Linda YacarinoX has said she expects the company to be profitable next year.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.