Banks' Deal With Elon Musk Is Worst Since 2008 Crisis

A number of big banks loaned Elon Musk $13 billion to buy what was then Twitter in 2022. Two years later, the Wall Street Journal reports that it now ranks as the worst such deal for banks since the 2008 financial crisis—and one of the worst of all time. The banks, including Morgan Stanley and Bank of America, planned to sell the debt quickly to other investors as is typically done, but the poor financial performance of the X platform has devalued the loans and made that strategy impossible. "The banks haven't been able to offload the debt without incurring major losses ... leaving the loans stuck on their balance sheets, or 'hung' in industry jargon," per the Journal.

Citing data from the firm PitchBook LCD, the newspaper says the Twitter deal has been "hung" longer than any comparable deal since the financial crisis of 16 years ago. "The loans have weighed on the banks for much longer than other hung deals we've seen," says Steven Kaplan of the University of Chicago, who counts the Twitter buy as among the biggest hung deals ever. The banks are able to collect sizable interest payments from Musk, but the prospect of the banks being made whole on their loans looks unlikely at the moment. One big factor: Musk bought Twitter for $44 billion, and it's currently valued at $19 billion. Read the full story. (More Elon Musk stories.)