The Paramount financing will test dealmaking appetite in a tumultuous 2026
Paramount Skydance is making headway on a huge debt deal to finance the acquisition of Warner Bros.
Turmoil in the bond market might have played a role in the decision of smart-ring maker Oura to shelve its IPO.
Yet the deep selloff gripping the $31.5 trillion Treasury market isn't putting the year's biggest M&A deal in jeopardy.
Bankers on Tuesday began officially marketing a big financing package to investors to help Paramount Skydance Corp. (PSKY) acquire Warner Bros. Discovery Inc. $(WBD)$.
The financing includes about $40 billion in investment-grade corporate bonds, as well as high-yield "junk" bonds and loans, according to CreditSights. Investors told MarketWatch it will include dollar and euro tranches, and that demand was far outpacing the amount of bonds offered.
Price thoughts on the 10-year tranche of investment-grade notes initially were in the area of 300 basis points, according to Informa Global Markets. With long-dated Treasury yields now well above 5%, that could translate to a yield in the 8% ballpark. Pricing and the deal structure's won't be finalized until Wednesday.
The mega financing comes at nerve-wracking moment for the U.S. bond market. The 10-year Treasury yield BX:TMUBMUSD10Y blew past the psychologically important 5% threshold in September. And it kept rising to 5.256% on Monday, its highest since May 2002, according to Dow Jones Market Data.
Corporate bonds are priced at a spread, or premium, above the relevant Treasury yield to help compensation investors for default risks. The surge in Treasury yields this year has lifted the yield on the ICE BofA US Corporate Index to nearly 6%, as the below chart shows.
Bond prices and yields move in the opposite direction. The sharp selloff in the Treasury market has many bond funds facing negative total returns in 2026, and bond exchange-traded funds in the red for the year.
The Paramount financing will be a closely watched barometer of the appetite for dealmaking despite rising borrowing costs in 2026. The deal was previously paused this summer after 12 states filed a lawsuit to prevent the merger from going forward. Paramount and Warner Bros. didn't immediately respond to requests for comment.
Moody's rated the capital structure Ba1, or the highest "junk"-rated category, while S&P Global and Fitch gave it at BBB- rating, the lowest rung in the investment-grade category.
Moody's said in a statement the tie-up "will be strategically transformative, materially enhancing scale, revenue diversification and margins." The credit-rating firm also noted that the companies generated over $65 billion of revenue over the past 12 months through the second quarter and that the combined company "will be a well-diversified media leader with a business profile similar to investment-grade peers."
Paramount shares fell 2.8% on Tuesday, and are down more than 25% on the year so far, according to FactSet. Warner Bros. shares were off 0.2% Tuesday, but are up 7% in 2026.
-Joy Wiltermuth