The banks that lined up $12.5 billion in financing for Elon Musk's Twitter deal reportedly facing steep losses as appetite for riskier debt sours

• Elon Musk's revival of the $44 billion buyout of Twitter comes as demand for risky debt is sinking.

• That means major banks financing the deal could face big losses, Reuters reported.

• Rising interest rates and recession fears are making investors worried about taking on debt loads.

Elon Musk's turnaround on the $44 billion buyout of Twitter is taking place at a time of reduced investor appetite for riskier debt – leaving major banks lined up to finance the deal potentially facing sharp losses, Reuters reported Wednesday.

Musk will put up much of the takeover tab by selling down his stake in Tesla, the electric vehicle maker he runs,  while major banks have committed to $12.5 billion in financing.

Reuters reported that more than 10 bankers and industry analysts, pointing to recent high-profile losses in leveraged financing, said the outlook was poor for the banks looking to sell the debt to get it off their books. Investors are concerned about riskier debt as interest rates spike, recession fears have grown and markets are volatile in the wake of Russia's invasion of Ukraine.