Paramount Skydance Corp. is preparing to bring a massive $50 billion debt sale to market as part of its $110 billion takeover bid for Warner Bros. Discovery Inc. (NASDAQ: WBD).
Bankers and the billionaire Ellison family itself are stretching financing structures to their limits as they work to execute one of the most complex credit market deals in recent memory.
On the Warner Bros. side, a JPMorgan Chase-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.
Lenders boosted that transaction’s size twice in a single 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, combined with scarce supply of new leveraged loans, helped generate more than $30 billion of orders from investors.
Paramount, meantime, has been working to convince credit-rating firms that it will 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, with S&P treating the verbal pledge as a tacit promise to inject additional capital if needed.
Facing deal skeptics who labeled post-merger leverage levels “frightening,” S&P pushed for that commitment to be made public, and Paramount subsequently disclosed the pledge in a regulatory filing.
Bank of America Corp. and Citigroup Inc.-led banks are talking to investors about a financing package tentatively structured as about $30 billion of high-grade bonds, $12 billion in high-yield notes and $7.5 billion in loans, though those terms could change.
“Markets have anticipated these financings for months, but the structure is exceptionally complex,” said Grant Nachman, Chief Investment Officer at Shorecliff Asset Management, describing it as elements of M&A acquisition financing, a media-sector LBO, and a liability management exercise all wrapped into one.
The deal is one of the biggest tests of demand in credit markets this year, having already required Paramount to knock Netflix out of the running using Larry Ellison’s $247 billion personal fortune as a guarantee.
“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.
Credit markets are currently as busy as they have been all year, with May ranking as the busiest month since January for leveraged loans, while junk bond issuance in the US sits at its highest in five years, up more than 35% on the same period in 2025.
“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, suggesting favorable conditions for even a deal of this scale.
