Wall Street banks are set to sell up to $3 billion in debt connected to Elon Musk's social media platform, X (formerly Twitter). Following Musk's $44 billion buyout of Twitter in 2022, banks like Morgan Stanley, Bank of America, and Barclays expected to receive a modest recovery, estimating a return of 90 to 95 cents on the dollar from investors. Banks initially faced challenges in selling this debt due to reduced revenues and increased risk of default stemming from Musk's operational changes and controversial management style. Previous attempts to offload the debt had reflected potential losses of 20%.
Banks typically sell such loans to investors soon after a deal is done, but lenders have faced difficulties in offloading the debt in the case of X.
Musk's sweeping changes to the platform, including laying off many people who worked to moderate content, and one of his posts on X, scared away advertisers and hit revenues.
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