Musk’s Twitter Bankers Face Potential Hit on Riskiest Debt

A group of banks led by Morgan Stanley that agreed to provide Elon Musk with $13 billion of debt financing for his acquisition of Twitter Inc. would risk taking a hit if they had to offload the financing to investors in the current risk-off market climate.

The lenders forged a deal with Musk based on a maximum interest rate of 11.75% for the $3 billion unsecured portion of the financing package, which is expected to be replaced by a bond with ratings in the CCC tier, according to a person with knowledge of the matter. Yet the average yield on ...