Paramount Skydance launches $44.4B bond sale to fund Warner Bros. Discovery deal, extends debt offers to Oct. 6

Paramount Skydance (PSKY) on Monday launched a $44.4 billion notes offering to pay for its acquisition of Warner Bros. Discovery (WBD), selling first-lien and second-lien debt in U.S. dollars and euros. Reports citing Bloomberg said Bank of America and Citigroup held investor calls on the sale, which breaks down into about $32 billion of investment-grade bonds and roughly $12.4 billion-equivalent of high-yield notes. Counting $7.5 billion of loans marketed the previous week, the financing package comes to about $52 billion, the largest M&A financing of the year, and the high-yield slice was expected to become the largest corporate junk bond sale on record.

The size stands out against the borrower. GuruFocus noted the offering is roughly four times Paramount's market value of about $11.2 billion, and that completing the notes sale is not a condition to closing the Warner Bros. Discovery deal. That makes pricing, and how much of the sale lands in the high-yield market, the main read on how credit investors view the combined company's leverage.

Separately, Paramount pushed the expiration of its exchange and tender offers for existing notes of Discovery Global Holdings and Discovery Communications, the legacy Warner Bros. Discovery debt, to 5:00 p.m. New York time on October 6. It is the fourteenth extension since June 12. As of September 25, about 67.33% of the notes targeted by the tender offers and 74.88% of those in the exchange offers had been validly tendered, and the company now expects settlement in the fourth quarter rather than the third. Paramount has said it is extending the offers to line up with the acquisition's closing date, so the moving deadline tracks deal timing rather than weak participation.

What to watch: final pricing and tranche sizes once the books close, any rating-agency response to the added debt, and whether the October 6 deadline holds or is extended again, which would signal the closing date is slipping further.

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