Elon Musk’s Twitter deal could tank the leveraged buyout market

Elon Musk’s antics have made it hard for his banks — Morgan Stanley, Bank of America, and Barclays — to sell the debt required to do the Twitter deal. So they’re just going to hold it, all $13 billion of it, The Wall Street Journal Reports. Truly a next-level “hold-my-beer” move, because it threatens to bring leveraged buyouts to a halt.

Typically, banks sell the debt used in a buyout to move on to the next deal. But since they’re holding Musk’s beers, they don’t have a free hand to hold anyone else’s. Or, The WSJ puts it, “The Twitter move threatens to bring the faltering leveraged-buyout pipeline to a standstill by tying up capital that Wall Street could otherwise use to back new deals.”

Part of the reason for holding Musk’s debt is because the appetite for it has decreased due to (Waves vaguely at Fed)Financial conditions But part of it is Musk’s mercurial approach to the deal:

Twitter and Mr. Musk have until October 28th to complete their planned purchase. there is still no guarantee the unpredictable billionaire will follow through or some other trouble won’t arise. (If the deal doesn’t close by that time, the two parties will go to court in November.) This means the banks wouldn’t have enough time to market the debt to third-party investorsIt takes several weeks to complete, even if they were eager to sell the property now.

Emphasis mine, obviously. Money types are not good at surprises.