Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Barclays could face sizeable losses from Musk's Twitter deal

Stock Markets Oct 05, 2022 12:41
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters Barclays could face sizeable losses from Musk's Twitter deal
 
BARC
-0.41%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BCS
-0.26%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TWTR
+0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TWTR34
+0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
B1CS34
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

As one of the banks funding Elon Musk's renewed intention to complete his Twitter Inc (NYSE:TWTR) takeover, Barclays PLC (LON:BARC) could be facing sizeable losses.

Overnight, it was revealed by Twitter that the boss of Tesla Inc (NASDAQ:TSLA) and SpaceX was no longer intending to back out of the US$44bn deal.

Banks including Barclays, Morgan Stanley (NYSE:MS), Bank of America Corp (NYSE:BAC) and France's BNP Paribas (EPA:BNPP) have committed to providing US$12.5bn of the cost of the deal, with Musk stumping up the lion's share of the funds in cash by selling down his stake in Tesla.

When backing large acquisitions, banks sell the debt to remove the risk from their books. But the turning tides of the financial markets in recent weeks could lead to losses for the banks in the hundreds of millions of dollars, industry experts told Reuters.

Investors have veered away from riskier debt such as these leveraged loans, worried by central banks across the globe quickly raising interest rates, ramping up recession fears that were already rising after Russia's invasion of Ukraine, leading analysts to warn that the outlook was poor for the banks trying to sell the debt.

Musk has also persuaded equity investors to back the deal, including the venture capital firm Andreessen Horowitz and the tech mogul Larry Ellison.

The syndicate of lenders, which also includes Societe Generale (EPA:SOGN) and Japan's Mizuho Financial and Mitsubishi UFJ Financial, remain on the hook until April, according to the terms of their contract, the New York Times noted.

Analysts at broker Wedbush told Reuters it was "less than ideal" for the banks but "they have no choice but to finance the deal".

They said they believed Musk made a U-turn on the deal as he "saw the writing on the wall" and knew his chances of a victory in the courts was "slim to none with the best path accepting the current deal and move forward".

"For Musk the irony is the easy part of this deal was buying Twitter, the hard part will be fixing it with monetization and subscriber engagement a Rubik's Cube problem for Twitter over the past decade."

Read more on Proactive Investors UK

Disclaimer

Barclays could face sizeable losses from Musk's Twitter deal
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email