As the companies’ bankers, including the billionaire Ellison family, prepare to bring a substantial $50 billion debt sale for the acquisition to market, they too are stretching their limits.
On the Warner Bros. side, a bank group led by JPMorgan Chase & Co. capitalized on the intense demand for leveraged loans, enabling them to save hundreds of millions in interest costs by refinancing a $15 billion bridge loan into longer-term debt. In just one week, lenders increased the transaction’s size twice, making it the largest term loan B ever offered, according to Bloomberg data.
The relatively high credit rating of Warner Bros., alongside a limited availability of new leveraged loans, attracted over $30 billion in orders from investors, according to those familiar with the transaction.
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Meanwhile, Paramount has been striving to persuade credit-rating agencies that it can manage its debt effectively enough to secure investment-grade ratings for some obligations—an essential move to keep financing costs manageable for the combined entity. CEO David Ellison committed that his family would make any necessary efforts to align Paramount’s leverage with forecasts.
Together, these initiatives highlight the extraordinary nature of Paramount’s strategy to consolidate two significant legacy media giants in Hollywood. They also reflect how, despite exhausting every option to outmaneuver Netflix Inc.—including securing the deal with Larry Ellison’s $247 billion personal wealth—the companies and their bankers continue to explore every avenue to ensure the success of this mega-merger.
“Markets have been anticipating these financings for months, but the structure is quite intricate,” remarked Grant Nachman, Chief Investment Officer at Shorecliff Asset Management. “It encompasses aspects of M&A acquisition financing, a media-sector LBO, and a liability management exercise all in one.”
Paramount’s LBO financing is emerging as one of the most significant tests of demand in the credit markets this year, with its success heavily dependent on achieving investment-grade ratings for certain debt. This is why Ellison has privately reassured cautious credit analysts that he and his family are willing to take measures to reduce debt at the merged company.
S&P regarded the verbal assurance as an implicit promise to contribute more capital if necessary to uphold the company’s debt position. Credit graders, facing skepticism from those concerned about the post-merger leverage levels deemed “alarming,” insisted that this commitment be made public. Last week, Paramount officially disclosed this pledge in a regulatory filing.
Bank of America Corp. and Citigroup Inc.-led banks are currently engaging with investors to discuss the composition of the debt package supporting the M&A, sources revealed. The financing is tentatively structured to include approximately $30 billion in high-grade bonds, $12 billion in high-yield notes, and $7.5 billion in loans, though these figures may change. The timing for the debt sale remains to be finalized, according to one of the sources.
“Investors will likely need to scrutinize the high-yield component more closely to assess supply dynamics,” stated Brett Kozlowski, a portfolio manager at GW&K Investment Management.
Despite this, credit markets are experiencing high activity levels, with increased borrowing rates driving demand for floating-rate debt like leveraged loans. May marked the busiest month for leveraged loans since January. Junk bond issuance in the U.S. has reached its highest level in five years, surging over 35% compared to the same timeframe in 2025, based on Bloomberg data.
Overall, some investors suggest that current market conditions are too favorable for buyers to shy away from even participating in a significant deal like Paramount.
“Given the scarcity of new issue supply, loans rated BB that are appropriately priced will be quickly absorbed,” asserted Michael Marzouk, a senior managing director at Aristotle Pacific Management.
