Loans of around $13 billion have remained ‘hung’ for nearly two years, bringing in interest payments but weighing on banks’ balance sheets
The $13 billion that Elon Musk borrowed to buy Twitter has turned into the worst merger-finance deal for banks since the 2008-09 financial crisis.
The seven banks involved in the deal, including Morgan Stanley and Bank of America, lent the money to the billionaire’s holding company to take the social-media platform, now named X, private in October 2022. Banks that provide loans for takeovers generally sell the debt quickly to other investors to get it off their balance sheets, making money on fees.
The banks haven’t been able to offload the debt without incurring major losses—largely because of X’s weak financial performance—leaving the loans stuck on their balance sheets, or “hung” in industry jargon. The resulting write-downs have hobbled the banks’ loan books and, in one case, was a factor that crimped compensation for a bank’s merger department, according to people involved with the deal.
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