Big Setback For Elon Musk! Twitter Credit Rating Withdrawn by S&P
Since Musk’s takeover of Twitter has brought sweeping changes to the company’s operations and product.
Twitter Inc.'s credit grade was withdrawn by S&P Global Ratings, which said it lacked sufficient information to continue covering the Elon Musk-owned social media company.
The rating firm, which is among the top in the US, said the action was “due to a lack of sufficient information to maintain the rating” in a release on Friday. At the time of the withdrawal, both Twitter and its debt were on “CreditWatch,” suggesting an imminent rating action.
Twitter's massive about $13 billion debt load was funded directly by banks led by Morgan Stanley when Musk's $44 billion acquisition of the social media giant closed. Since then, Musk's takeover of Twitter has brought sweeping changes to the company's operations and product. Those changes included mass layoffs, changes in features and a raft of companies pulling advertising dollars from the platform.
The group of banks that funded the buyout now face the challenge of syndicating the debt to investors, many of whom use rating companies to determine the risk involved in buying credit.
S&P downgraded the company five notches to B- from BB on Nov. 1 as a result of its high leverage post-acquisition. The rating firm expected to “obtain more information regarding the final capital structure and any potential changes to the operating strategy,” according to the November research update.
Still, the rating firm said at the time, that “may not occur until the company's new debt is syndicated.”
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