Paramount Skydance launches $40 billion bond sale to fund Warner Bros. buyout

Paramount Skydance Corp. bankers began officially marketing a roughly $40 billion investment-grade corporate bond package on Tuesday to help finance the company's acquisition of Warner Bros. Discovery Inc., according to CreditSights.

The financing also includes high-yield "junk" bonds and loans, with dollar and euro tranches, and demand from investors was far outpacing the amount of bonds offered, investors told MarketWatch.

What does the rising Treasury yield mean for the deal?

Price thoughts on the 10-year tranche of investment-grade notes were initially in the area of 300 basis points over Treasuries, according to Informa Global Markets. With long-dated Treasury yields now well above 5%, that spread could translate to a yield near 8%.

The 10-year Treasury yield blew past the psychologically important 5% threshold in September and rose to 5.256% on Monday, its highest level since May 2002, according to Dow Jones Market Data. The ICE BofA US Corporate Index yield has climbed to nearly 6% in 2026.

Pricing and the deal structure will not be finalized until Wednesday.

How have the credit agencies judged the new entity?

Moody's rated the post-deal capital structure Ba1, the highest "junk" category. S&P Global and Fitch each assigned a BBB- rating, the lowest rung in the investment-grade category. Fitch rated Paramount Skydance's first-lien notes BBB and second-lien notes BB.

Moody's said the tie-up "will be strategically transformative, materially enhancing scale, revenue diversification and margins." The agency also projected that the combined company "will be a well-diversified media leader with a business profile similar to investment-grade peers."

Paramount and Warner Bros. generated more than $65 billion of revenue over the trailing 12 months through the second quarter, Moody's noted.

Why is the bond market under stress now?

The $31.5 trillion Treasury market has sold off sharply in 2026, pushing many bond funds and bond ETFs into negative total returns for the year. Turmoil in fixed income also contributed to smart-ring maker Oura's decision to shelve its IPO this week.

Paramount and Warner Bros. did not immediately respond to requests for comment.

What's the legal backdrop?

The merger was paused this summer after 12 states filed a lawsuit to prevent it from going forward. The financing push on Tuesday signals Paramount's intent to move ahead despite the litigation.

How are the stocks reacting?

Paramount shares fell 2.8% on Tuesday and remain down more than 25% year-to-date, according to FactSet. Warner Bros. Discovery slipped 0.2% on Tuesday, though the stock is up 7% in 2026.

The financing will be a closely watched barometer of corporate dealmaking appetite in a year when borrowing costs have climbed steadily higher. Wednesday's pricing will show whether the year's largest media M&A transaction can clear a market that has already priced out at least one IPO candidate.