Elon Musk Twitter deal could cost financer banks way too much. Here’s why

Major US and foreign banks stand to suffer losses of $500 million or more if they follow their commitment to finance Elon Musk’s $44 billion acquisition of Twitter, a report said. “If the debt were to be sold now” it would lead to a collective loss of $500 million or more, a Bloomberg report said.

The banks which are led by Morgan Stanley, Barclays and Bank of America, had pledged to raise $13 billion in debt to finance Elon Musk’s purchase of Twitter. As this commitment was unconditional, the banks will have to sell their debt to investors no matter what, the report said.

When the banks had agreed to finance the Musk-Twitter deal in April, they had done so on terms with lower returns. But owing to the worsening of credit markets due to higher interest rates amid record inflation, the situation could result in write-downs, the report said.