Banks led by Morgan Stanley have sold to investors another chunky portion of loans that formed the $13 billion debt supporting Elon Musk’s $44 billion acquisition of Twitter, now X, in 2022, a source with knowledge of the deal said.
On Thursday, they completed the secondary sale of $4.74 billion of secured loans which mature in October 2029. The loans paid a fixed rate yield of 9.5% and priced at par or at 100 cents to the dollar, said the source. The loan sale was upsized from an initial $2.97 billion.
With the latest sale, the banks - that besides Morgan Stanley includes Bank of America, Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale - have been able to shed almost all of the $13 billion they have been holding on their books for nearly two years.
Aren’t they allowed to bail before these mature? I don’t fully understand the technicals but I’m trying.
What the banks sold are essentially debt notes. If there is a buyer that is willing to take on the risk of non-payment for the originally agreed interest over time, the original bank can sell the debt. This would be similar to how a mortgage is essentially a debt note that banks sell to other institutions that are willing to wait the years it takes for you to pay off your mortgage the new owner of your mortgage gets the all the interest as well as the original principal.