(Bloomberg) -- Moody's Investors Service lowered its credit rating for Twitter Inc. following the close of the social-media giant's leveraged buyout by Elon Musk.
The credit rating company cut Twitter two notches to B1, or four steps into junk territory, according to a statement Monday. Moody's said it expects that a substantial increase in debt and reduction of cash will result in a material increase in leverage and weakening of other credit metrics. Moody's cited governance “as a major driver” of the rating action. The credit ratings remain on review for downgrade.
“Twitter's governance risk is highly negative reflecting Moody's expectation for aggressive financial policies and concentrated ownership by Elon Musk,” Moody's said.
Musk closed his $44 billion acquisition of Twitter last week.
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