The WSJ reported on Tuesday that the debt for Musk's Twitter purchase has been stuck on banks' balance sheets, eating into the ability to fund other deals.
  • Elon Musk’s Twitter acquisition ended up being the worst financing deal for banks since 2008, the WSJ said.
  • The $13 billion in loans Musk took out have been stuck on banks’ balance sheets.
  • The loans have cut into pay for bankers and lenders’ ability to finance other deals, the Journal reported.
  • gwindli@lemy.lol
    0·
    3 months ago

    twitter is losing revenue and cant pay the principle on the loan. nobody will buy this debt from the banks that issued the loan because twitter is a sinking ship. the great majority of elon’s wealth is tied up in tesla stock, so if he sells any the value of the rest of what he holds goes down because the sale effects the stock price… basically nobody is solvent enough to repay the loans, so the banks that issued the loans are stuck with them instead of selling that debt to get it off their books fast.

    • Blue_Morpho@lemmy.world
      0·
      3 months ago

      If Musk has to sell Tesla stock to pay back the loan, what does the bank care? There is something not being reported about the loan terms that they could lose money.

      • AA5B@lemmy.world
        0·
        3 months ago

        The bank cares because

        • he can’t sell $13B in stock without crashing the value - he can’t pay it off fast
        • someone with that much ownership has serious restrictions on how they can sell. Again, limiting ability to pay off loans
        • banks generally don’t keep loans, they originate and sell. But no one will buy with those restrictions
      • gwindli@lemy.lol
        0·
        3 months ago

        the bank doesn’t care, but musk does. cashing out some tesla stock to pay the twitter loans hits him twice so he wont do it except out of desperation.