In a shocking development, it has been reported that the loans obtained by Elon Musk to acquire Twitter have turned out to be the worst merger-finance deal for banks since the 2008-09 financial crisis. Seven major banks, including Bank of America and Morgan Stanley, had collectively lent Musk's holding company a staggering $13 billion to facilitate the acquisition of the social media behemoth, with the aim of taking it private in 2022.

According to The Wall Street Journal, banks involved in such deals typically aim to sell off the debt to other investors promptly. However, in the case of the Twitter acquisition, this has not been possible. The Journal reveals that due to Twitter's underwhelming financial performance, banks have been unable to offload the debt without suffering considerable losses. Consequently, the loans have become "hung" or stuck on the banks' balance sheets.

PitchBook LCD data cited by The Wall Street Journal indicates that the outstanding Twitter loans have remained unsold for an extended period, surpassing the duration of any similar unsold deal since the 2008-09 financial crisis. The report highlights that while the lenders have been able to accrue substantial interest payments on the loans, several banks have been forced to mark down their value by hundreds of millions of dollars.

It is worth noting that Musk's ambitious $44 billion takeover of Twitter, which he has since renamed X, significantly devalued the loans. Nevertheless, the current state of the Twitter deal is being described as "historic territory" in terms of its abysmal performance.

One of the major factors contributing to the banks' decline in the investment banking league tables has been the lingering effects of the Twitter loans and other "hung" deals. As a result, some bankers have also seen their pay impacted by these poor investments.

Barclays, for instance, experienced multiple failed deals that adversely affected its overall performance, with the Twitter acquisition taking the biggest toll. Sources have revealed to The Journal that top investment bankers within Barclays' mergers and acquisitions team were informed last year that their compensation would be slashed by at least 40% compared to the previous year.

X, the company under Musk's leadership, has faced its fair share of challenges, particularly in its relationship with advertisers, who contribute to the majority of its revenue. Musk's verbal outbursts and confrontations with some advertisers have worsened the situation, leading to a loss of trust and financial losses for the company. In fact, earlier this month, X even filed a lawsuit against an advertising alliance and some of its members, alleging a coordinated boycott that cost the company billions of dollars.

The consequences of the ill-fated Twitter loans and other unsold deals continue to haunt the banks involved, impacting their financial standing and potentially leading to significant repercussions for their employees. As the memory of the financial crisis looms large, questions arise regarding the due diligence process and risk assessment employed in such high-profile investments.