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Twitter Bonds Signal Skepticism That Elon Musk’s Takeover Bid Will Succeed

Twitter’s bonds rose slightly Thursday after the world’s richest man announced a $43 billion takeover proposal; yet the bonds are still trading below face value, promising more upside if the deal goes through

Twitter headquarters in San Francisco, California.
By Josyana Joshua and Olivia Raimonde
April 14, 2022 | 01:03 pm

Bloomberg — Elon Musk’s offer to buy Twitter Inc. (TWTR) is giving a boost to the social-media company’s debt.

Twitter’s bonds rose slightly Thursday after the world’s richest man announced the $43 billion takeover proposal.

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Yet the bonds are still trading below face value, promising more upside if the deal goes through. Robert Schiffman, a Bloomberg Intelligence analyst, said Twitter would likely be required to buy back the securities for 101 cents on the dollar if the company is taken over.

With the bonds holding below that level, he said that suggests skepticism that Musk’s bid will succeed.

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“Twitter’s bonds, trading below par, appear well protected from Elon Musk’s all-cash offer to privatize the company by language that includes a clause potentially requiring the company to make an offer to repurchase the bonds at 101 cents on the dollar,” Schiffman said in a note.

Twitter’s 5% bond due March 2030 rose 0.87 cents on the dollar to 98.87 cents, according to Trace data. Its 3.875% bonds due December 2027 also rose 1.26 cents to 97.41 cents.

“Musk’s “best and final” $43 billion non-binding offer has numerous conditions, including completion of financing, which we believe give it a low probability of success,” Schiffman wrote.

The social media company’s shares rose as much as 5.8% before giving back the gains as investors began to assess the odds of Musk’s deal going through. Twitter said that its board would review the proposal and any response would be in the best interests of “all Twitter stockholders.”