If you wondered whether bond buyers still have an appetite for mega media deals, here is your answer. By the time order books closed Tuesday afternoon, Paramount Skydance Corp. had racked up more than $109 billion of demand for its investment-grade sale, or about 3.4 times the expected size. For context, this year's average oversubscription for similar investment-grade sales in this currency is closer to four times, per Bloomberg data.
This flagship slice sits within a $52 billion financing bundle that features both high-yield bonds and loans. Paramount aims to raise about $32 billion in this tranche, which would rank as the fifth-largest US high-grade bond sale on record. The company is offering first-lien US dollar notes in eight slices spanning two to 40 years.
Early talk for the 2066 maturity points to a spread near 3.65 percentage points over Treasuries, and the deal is slated to price Wednesday. Apollo Global Management Inc., Bank of America Corp. and Citigroup Inc. are leading the transaction. Paramount, Apollo and the banks either declined to comment or did not respond.
Outside the investment-grade notes, the deal adds roughly $12.4 billion-equivalent of speculative-grade bonds in dollars and euros, together with about $7.5 billion-equivalent of loans denominated in both currencies. People familiar said orders total about $15.6 billion for the high-yield bonds, while loan demand stands near $11.5 billion.
The financing is arriving following a months-long holdup and with a higher all-in cost, with the jump in Treasury yields raising the all-in rate. The bonds and loans had been targeted for midyear, but litigation tied to the Warner Bros. Discovery acquisition paused the process until two settlements last week reopened the path.
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Earlier this year, Warner Brothers attracted multiple bidders, and Paramount ultimately topped Netflix Inc. via a $110 billion deal to build a media powerhouse that would rank among the largest globally. Apollo, Bank of America and Citigroup supplied the original funding for that acquisition, then syndicated the debt out to a consortium of 18 banks.
Fitch Ratings and S&P Global Ratings assigned investment-grade ratings to the proposed first-lien notes, while Moody's Ratings placed them a step below that mark. Moody's says the Warner purchase will raise Paramount's total borrowings by more than $30 billion and increase leverage to roughly seven times an earnings yardstick. In a Monday note, it warned, "Credit metrics at closing will therefore resemble those of highly speculative issuers with very low single-B ratings," while also highlighting governance concerns - elevated leverage, concentrated ownership, a plan that would put new debt ahead of current senior unsecured bondholders, and uneven achievement of financial targets. S&P said the BBB- rating it assigned to the first-lien debt reflects the Ellison family's pledge to reduce leverage to 3.75 times by 2028 and to three times in 2029.
Big-ticket M&A has been fueling investment-grade issuance lately. Just last week, Sysco Corp. raised about $17 billion across three currencies. For your wallet, here is the bottom line: a split-rated, first-lien bond tied to a headline-grabbing media merger is coming at a time of higher Treasury yields and heavier leverage. If you follow income ideas or credit risk, this is one to watch as pricing hits.
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