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What is the story about?
Paramount Skydance Corp. stretched, then stretched, then stretched again in its audacious $110 billion takeover bid for Warner Bros. Discovery Inc.
Now the companies’ bankers — and even the billionaire Ellison family itself — are doing the same as they prepare to bring the massive $50 billion debt sale for the buyout to market.
On the Warner Bros. side, a JPMorgan Chase & Co.-led bank group seized on red-hot demand for leveraged loans to save hundreds of millions of dollars in interest costs by refinancing a $15 billion bridge loan with longer-term debt. The lenders boosted the transaction’s size twice in a week, making it the largest so-called term loan B ever to hit the market, according to data compiled by Bloomberg.
Warner Bros.’ credit grade, on the higher end for junk-rated borrowers, coupled with a scarce supply of new leveraged loans, helped garner more than $30 billion of orders from investors, according to people with knowledge of the transaction.
Also read: India waives cotton import duty till Oct 30 to boost supply for textile sector
Paramount, meantime, has been working to convince credit-rating firms that it’ll keep its debt load contained enough to merit investment grade ratings on some of its obligations — a crucial step to cap financing costs that could otherwise overwhelm the combined entity. Chief Executive Officer David Ellison pledged that his family would do what it takes to keep Paramount’s leverage in line with forecasts.
Combined, the efforts speak to the remarkable nature of Paramount’s move to consolidate two of Hollywood’s largest legacy media companies. They also show how, even after pulling out seemingly every stop to knock Netflix Inc. out of the running, including guaranteeing the deal with Larry Ellison’s $247 billion personal fortune, the companies and their bankers are still eying every lever to pull to ensure the mega-merger’s success.
“Markets have anticipated these financings for months, but the structure is exceptionally complex,” said Grant Nachman, Chief Investment Officer at Shorecliff Asset Management. “Elements of M&A acquisition financing, a media-sector LBO, and a liability management exercise all wrapped into one.”
Paramount’s LBO financing is shaping up as one of the biggest tests of demand in the credit markets this year. Its success hinges in no small part on securing investment grade ratings on some of its debt, which is why Ellison privately tried to assuage wary credit analysts that he and his family would do whatever it takes to slash debt at the combined company.
S&P considered the verbal pledge to be a tacit promise to inject additional capital if needed to maintain the company’s debt standing. The credit graders, facing deal sceptics who labelled post-merger leverage levels “frightening,” pushed for that commitment to be made public. Last week, Paramount disclosed the pledge in a regulatory filing.
Bank of America Corp. and Citigroup Inc.-led banks are talking to investors about the makeup of the debt package backing the M&A, the people familiar said. The financing is tentatively structured as about $30 billion of high-grade bonds, $12 billion in high-yield notes and $7.5 billion in loans, but that could change, they said. The timing of the debt sale is yet to be finalised, one of the people added.
“The high-yield component of this is probably the one the market’s going to have to evaluate a little closer and figure out what that supply feels like,” said Brett Kozlowski, a portfolio manager at GW&K Investment Management.
Still, credit markets are about as busy as they have been all year, with higher borrowing rates boosting demand for floating-rate debt like leveraged loans. May was the busiest month since January for leveraged loans. Junk bond issuance in the US is at its highest in five years, and up more than 35% on the same period in 2025, according to data compiled by Bloomberg.
Overall, some investors say market conditions are too favourable for buyers to be scared away from at least nibbling at a big deal like Paramount.
“Given the lack of new issue supply, loans rated BB that are priced right will get gobbled up quickly,” said Michael Marzouk, a senior managing director at Aristotle Pacific Management.
Now the companies’ bankers — and even the billionaire Ellison family itself — are doing the same as they prepare to bring the massive $50 billion debt sale for the buyout to market.
On the Warner Bros. side, a JPMorgan Chase & Co.-led bank group seized on red-hot demand for leveraged loans to save hundreds of millions of dollars in interest costs by refinancing a $15 billion bridge loan with longer-term debt. The lenders boosted the transaction’s size twice in a week, making it the largest so-called term loan B ever to hit the market, according to data compiled by Bloomberg.
Warner Bros.’ credit grade, on the higher end for junk-rated borrowers, coupled with a scarce supply of new leveraged loans, helped garner more than $30 billion of orders from investors, according to people with knowledge of the transaction.
Also read: India waives cotton import duty till Oct 30 to boost supply for textile sector
Paramount, meantime, has been working to convince credit-rating firms that it’ll keep its debt load contained enough to merit investment grade ratings on some of its obligations — a crucial step to cap financing costs that could otherwise overwhelm the combined entity. Chief Executive Officer David Ellison pledged that his family would do what it takes to keep Paramount’s leverage in line with forecasts.
Combined, the efforts speak to the remarkable nature of Paramount’s move to consolidate two of Hollywood’s largest legacy media companies. They also show how, even after pulling out seemingly every stop to knock Netflix Inc. out of the running, including guaranteeing the deal with Larry Ellison’s $247 billion personal fortune, the companies and their bankers are still eying every lever to pull to ensure the mega-merger’s success.
“Markets have anticipated these financings for months, but the structure is exceptionally complex,” said Grant Nachman, Chief Investment Officer at Shorecliff Asset Management. “Elements of M&A acquisition financing, a media-sector LBO, and a liability management exercise all wrapped into one.”
Paramount’s LBO financing is shaping up as one of the biggest tests of demand in the credit markets this year. Its success hinges in no small part on securing investment grade ratings on some of its debt, which is why Ellison privately tried to assuage wary credit analysts that he and his family would do whatever it takes to slash debt at the combined company.
S&P considered the verbal pledge to be a tacit promise to inject additional capital if needed to maintain the company’s debt standing. The credit graders, facing deal sceptics who labelled post-merger leverage levels “frightening,” pushed for that commitment to be made public. Last week, Paramount disclosed the pledge in a regulatory filing.
Bank of America Corp. and Citigroup Inc.-led banks are talking to investors about the makeup of the debt package backing the M&A, the people familiar said. The financing is tentatively structured as about $30 billion of high-grade bonds, $12 billion in high-yield notes and $7.5 billion in loans, but that could change, they said. The timing of the debt sale is yet to be finalised, one of the people added.
“The high-yield component of this is probably the one the market’s going to have to evaluate a little closer and figure out what that supply feels like,” said Brett Kozlowski, a portfolio manager at GW&K Investment Management.
Still, credit markets are about as busy as they have been all year, with higher borrowing rates boosting demand for floating-rate debt like leveraged loans. May was the busiest month since January for leveraged loans. Junk bond issuance in the US is at its highest in five years, and up more than 35% on the same period in 2025, according to data compiled by Bloomberg.
Overall, some investors say market conditions are too favourable for buyers to be scared away from at least nibbling at a big deal like Paramount.
“Given the lack of new issue supply, loans rated BB that are priced right will get gobbled up quickly,” said Michael Marzouk, a senior managing director at Aristotle Pacific Management.
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