Shulou(Shulou.com)11/24 Report--

Oct. 22, according to foreign media citing people familiar with the matter, the bank that provided $13 billion in financing for the acquisition of Twitter by Tesla CEO Elon Musk has abandoned plans to sell bonds to investors because of uncertainty about the future development and financial situation of social media company Twitter.

The bank that promised to help Mr Musk buy Twitter plans to hold all the $13 billion in debt to support the deal, rather than syndicating it, according to people familiar with the matter. The banks are understood to have decided to put the debt on their balance sheets to avoid selling at a loss to bond and loan fund managers.

It had been reported that banks could face losses of about $500m or more if they tried to sell Twitter debt at current market prices as market turmoil intensified. Assuming the acquisition is completed, the bank hopes to sell some of Twitter's debt early next year when market conditions improve, and banks are understood to be discussing how to split the debt into different parts.

Banking institutions, including Morgan Stanley, Bank of America and Barclays, declined to comment.

In April, Musk agreed to buy Twitter for $44 billion, but then the Fed began to raise interest rates to fight inflation. This makes acquisition financing too cheap for credit investors, so banks will have to bear financial losses totaling hundreds of millions of dollars to wipe the deal off their books.

Another factor that hinders banks from selling bonds is the uncertainty of the completion of the deal. Mr Musk has said he would withdraw from the deal, saying he was misled by the inaccurate number of fake accounts on Twitter. It was not until earlier this month that Musk agreed to comply with a Delaware court judge's order to complete the deal by the October 28 deadline. Musk has yet to disclose details of Twitter's management and business plans, and many bond investors are taking a wait-and-see attitude, sources said.

Because of the large amount of debt on Twitter, the debt package involved in the Twitter deal includes riskier junk bonds, as well as secured and unsecured bonds.

With rising interest rates and rising market volatility, many investors are shunning junk-rated bonds. For example, Wall Street banks, led by Bank of America, lost $700m in September on the sale of about $4.55 billion of debt. The debt financed the leveraged buyout of Citrix Systems, a business software company.

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