Paramount puts $56b bond sale for Warner deal in motion

Paramount Skydance is set to launch a USD 44 billion ($56 billion) bond sale in USD and euros to fund its acquisition of Warner Bros Discovery, marking one of the year's largest M&A financing operations. On September 28, Bank of America and Citigroup will hold investor calls to discuss the sale of approximately USD 32 billion ($40 billion) in investment-grade debt and USD 12.4 billion ($15.8 billion) in junk bonds.

The transaction is part of a USD 52 billion ($66 billion) financing package that also includes USD 7.5 billion ($9.5 billion) in loans. Paramount plans to sell eight tranches of USD-denominated high-grade bonds, with maturities ranging from two to 40 years, and three tranches of USD notes with maturities in five, eight, and 10 years.

The 10-year USD notes are priced at a yield in the low 9% range. The offering comes amid surging Treasury yields, driven by renewed tensions between the US and Iran and the resulting impact on oil prices. Credit investors had been waiting months for Paramount's mega-deal, which was initially expected to be launched around midyear but was delayed due to lawsuits filed by 12 state attorneys general and the Writers Guild trade union.

Both cases were settled last week, allowing the deal to proceed. The junk-bond sale is expected to be the largest-ever corporate high-yield bond sale, surpassing SoftBank Group's recent offering. The remaining transaction details are scheduled to be finalized by September 30. If the USD 110 billion ($142 billion) takeover deal does not close before October, Paramount will have to pay Warner Bros shareholders USD 7 million ($8.9 million) daily.