Paramount Skydance has launched a historic corporate bond offering to finance its acquisition of Warner Bros. Discovery.
The entertainment conglomerate sought $52 billion in total financing to complete the approximately $110 billion merger.
The bond issuance had been delayed due to antitrust lawsuits filed by 12 state attorneys general and the Writers Guild.
Following the settlement of both cases, Paramount moved forward with the offering, absorbing the financial impact of rising interest rates during the waiting period.
Investor Demand and Underwriter Adjustments
Investor demand for the $30 billion first-lien bond tranche reached over $109 billion by Tuesday, according to Bloomberg.
The safe, investment-grade portion was oversubscribed by 3.6 times, slightly below the annual market average of four times coverage for similar corporate offerings.
The riskier second-lien, junk-rated tranche attracted more than $23 billion in orders for $12.4 billion on offer.
Bloomberg reported that the transaction represents the largest junk bond sale in its historical record.
Underwriters adjusted the terms of the deal following strong order volume.
Underwriters reduced the markup yield on the bonds, lowered the first-lien debt allocation by $2 billion in favor of direct bank loans, and canceled a planned euro-denominated junk bond sale.
Benchmark 30-year U. S.
Treasury yields exceeding 5% pushed overall borrowing costs higher.
Paramount's longest-dated bond maturing in 2066 carries an annual yield of 8.90%, while the company's junk-rated debt yields up to 9.125%.
