Financial Institutions That Extended $13 Billion in Loans to Musk for Twitter Acquisition May Be Experiencing Buyer’s Remorse

X, formerly recognized as Twitter, is currently perceived as a rather regrettable financial decision.

As some readers may remember, the tech magnate Elon Musk secured a massive $13 billion loan from Morgan Stanley, Bank of America, along with five other leading banks to fund his $44 billion takeover of what was known at the time as Twitter. The Wall Street Journal has labeled this transaction as the most unfavorable merger-financing venture for banks since the financial downturn of 2008-2009, leading to significant financial writedowns and, for at least one bank, reduced bonuses.

In typical circumstances, banks that finance buyouts aim to offload this debt to other parties, thereby profiting from the fees generated from these transactions. However, this strategy faltered with X due to the company’s disappointing financial performance. This left the banks saddled with the loans far longer than anticipated, tagging them in the finance industry as “hung deals.”

According to sources familiar with the situation, as reported by the WSJ, the banks opted to back the loans “largely because the opportunity to serve the world’s wealthiest individual proved too enticing to resist.” Presently, this decision appears to be an expensive error — unless the banks can secure interest payments from X and are repaid the loan principal upon maturity.