X, formerly known as Twitter, seems like a pretty bad investment right now.
As readers may recall, Elon Musk borrowed $13 billion from Morgan Stanley, Bank of America and five other major banks to help finance the $44 billion acquisition. According to According to the WSJ, the deal has since become the worst merger financing deal for banks since the 2008-2009 financial crisis.
Why? When banks borrow money for acquisitions, they usually sell that debt to others, earning fees on the transaction. That wasn’t possible at
The WSJ notes that the banks agreed to make these loans “largely because the lure of banking the richest person in the world was too attractive to pass up.” Now it seems like a costly mistake unless they can get interest payments out of X, plus a principal repayment once the loans mature.