In September, the banks that financed the Citrix buyout underwent a similar restructuring. TLAs are considered a relatively safe category of loans that are held by the lenders themselves. ,īanks can hold more debt on their books by converting some unsecured loans into second lien loans or loans secured by pledging collateral, and term loan A (TLA), a large part of many high-yield bankers and investors Looking to sell the part. “If loan commitment is really tough here, banks may have to consider delaying loan syndication schemes, if there is no appetite for highly leveraged transactions in the market, it would make no sense to come and take us Watch immediately,” he said. īegley said the fact that banks have not reached out to them could also be an indication that they were looking to stay on the loan till the market improves. Typically, such ratings are sought two to three weeks before a debt sale to give agencies time, but Begley said a smaller change was possible, as his firm last issued bonds in February when the company posted a BA on Twitter. Moody’s senior analyst Neil Begley said banks have not yet approached his firm for such a rating.īegley said, “If bank groups are looking for a deal for the syndicate, they often follow credit ratings because that debt acts like a passport to capital markets, but we haven’t heard from them yet. “It’s currently out of money for the banks and for Musk,” Goss said.ĭebt financing packages include leveraged loans, which are risky due to the amount of debt the company is taking as well as secured and unsecured bonds.Īny loan sale to a wider investor pool would require credit ratings from the top three rating agencies, Moody’s Investors Services, S&P and Fitch. Musk will have a big hand in any talks with Banks. Roberta Goss, head of bank lending and collateralized debt obligation platform for investment manager Pretium Partners, said any financing with investors is “going to be a tough sell” as the amount of debt accounts for about seven of Twitter’s 2022 expected profit of $2. Musk, however, conditioned his offer on his ability to secure debt financing and now has until October 28 to close the transaction. The debate, currently a topic of conversation between investment bankers and debt investors, provides a window into the havoc wreaked on Wall Street by Musk’s U-turn last week.Īfter engaging in a court battle that lasted for weeks trying to get out of it, Musk abruptly decided he would close his deal on original terms. Representatives for Musk and Twitter did not respond to requests for comment. Morgan Stanley, Barclays, MUFG, Bank of America, Societe Generale, Mizuho and BNP Paribas declined to comment. Reuters could not determine whether banks had approached Musk with the offer.
In that case, Wall Street firms lost about $700 million after selling $8.55 billion in debt and bonds, market sources and investors said, but avoided an even bigger loss by tweaking the package.īut any changes to the financing structure would require Musk’s signature, and there’s no guarantee he’ll agree, he said.
#The syndicate project twitter software#
Two people familiar with the banking syndicate’s thinking pointed to Wall Street’s experience, with the financing provided to fund the buyout of business software company Citrix Systems Inc., as a possible model. Half a dozen debt in the near term according to capital market bankers and investors. However, banks may attempt to reduce their losses by increasing the amount of a loan secured by collateral so that it is less risky, keeping a larger portion of it on their balance sheets, and reducing the amount that they offer to investors. This means that if banks tried to sell the debt now, they would have to do so to entice investors to take it out of their hands. But the financing terms were set in April when Musk first made an offer for Twitter, and the market for such debt has since collapsed. Typically, banks will sell debt to investors and collect an underwriting fee. Morgan Stanley, Bank of America Corp, Barclays Plc and Mitsubishi UFJ Financial Group Inc led $13 billion in funding for a bid by the world’s richest man and Tesla Inc and SpaceX chief executive Musk. There may be a way to reduce the number of hits taken. (Reuters) – Elon Musk’s bank, facing heavy losses over its commitment to finance the $44 billion buyout of Twitter Inc., may not have pulled out of the deal easily, but they have the money to do with them.
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