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If terms of the original $12.5b financing package remain the same, bankers may struggle to sell the risky Twitter buyout debt just as credit markets begin to crack. With yields at multiyear highs, they’re potentially on the hook for hundreds of millions of dollars of losses on the unsecured portion alone should they try to unload it to investors. That’s because they would almost certainly have to offer the debt at a steep discount.
“It’s similar to a vegetarian going to a steakhouse: Very limited appetite,” said John McClain, a high-yield portfolio manager at Brandywine Global Investment Management, referring to investor demand for buyout debt. “Given the incremental company specific news flow since the deal was agreed to -- combined with the meaningful deterioration in the economy -- lenders will be very hesitant to provide financing.”
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