Paramount Skydance needed to borrow a very large amount of money quickly, and last week it did. On Wednesday it priced $41.4 billion of senior secured notes, split between first-lien and second-lien debt, along with an additional term loan. With cash on hand and borrowing and equity it had already arranged, the money will pay for its takeover of Warner Bros. Discovery and refinance some existing debt.
On Thursday, the bonds started trading, and the price fell.
Junk-rated bonds took the worst of it. The eight-year dollar notes changed hands at roughly 96 cents on the dollar, after investors had paid full price the day before, Bloomberg reported. Paper losses on the investment-grade portion alone exceeded $100 million. A $6 billion tranche of second-lien notes paying 8.25 per cent and due in 2031, rated as junk, traded at $97.50, according to Barron's. Some of the bonds recovered later in the session.
Paramount's existing debt fell harder. Its unsecured 6.875 per cent bonds due 2036 dropped six points to 79, Barron's reported, pushing their yield to 10.4 per cent from 9.25 per cent. The new secured debt ranks ahead of them if anything goes wrong. The cost of insuring Paramount's debt against default rose to its highest in 17 years, and its shares fell 9.6 per cent, their largest one-day drop since December.
Why it was done in a hurry
A judge cleared the last legal obstacle on Wednesday, approving Paramount's settlement with the state attorneys general who had sued to block the deal. That left a clock running. Under the merger agreement, Paramount owed Warner Bros. Discovery shareholders roughly $7 million for every day the deal remained unclosed after 1 October, according to Bloomberg. The deal is now due to close on Tuesday, 6 October.
The price of speed was high. Three of the investment-grade bonds were expected to yield at least 8 per cent, a level only two other US high-grade bonds had reached all year, Bloomberg reported. Treasury yields rose during the months the deal was held up. The ten-year Treasury closed at 5.29 per cent on 30 September, against 4.16 per cent a year earlier. In the final days the banks reworked the package, pulling a euro-denominated junk bond and moving some of the money from bonds into a loan.
Buyers also complained about how the bonds were sold. The high-grade order book had been advertised as more than $109 billion, but a substantial share of that demand disappeared once the underwriters, Bank of America and Citigroup, cut the extra yield they were offering, according to Bloomberg, which reported angry calls and messages from money managers.
The two views
Dennis Cinelli, Paramount's chief financial officer, called the selloff "one-day choppiness in the market". The company entered the market "not for a one-day trade, but to execute a transformative transaction", he said. Leon Kalvaria, chairman of Citigroup's institutional clients group, said the financing "turned out incredibly well in a choppy market".
Jeff Gundlach, the founder of DoubleLine, saw it otherwise. Paramount had "floated the largest high yield bond offering in history this week, and the bonds sold off immediately in trading afterwards," he wrote on X, according to Barron's. "This is not a sign of a strong market."
What the debt sits on
The company that carries this debt will have a new name. David Ellison, Paramount's chief executive, said on Friday that the combined business will be called Skydance, after the studio he founded in 2006, with Paramount and Warner Bros. kept as sub-brands. Its shares will move from Nasdaq to the New York Stock Exchange under the ticker SKYD, The Hollywood Reporter said. The deal is valued at about $110 billion.
The settlement that cleared the way also limits how the new company can cut costs to pay its interest. The consent decree, as reported by 24/7 Wall St., sets minimum numbers of cinema releases, a floor on domestic production spending and a bar on selling or closing the Paramount and Warner Bros. studio lots, and requires an editorial independence board for CBS News and CNN. This publication reported last month on how that settlement came together.
So the company that closes on Tuesday will start life with tens of billions of dollars of new debt priced at junk-like yields, a share price that fell on the news of its financing, and commitments that keep some of the obvious savings off the table. The bond market's first day is not a verdict. It is a reminder of what the buyers of that debt are now watching.
The pricing of the notes and their use is from Paramount Skydance's announcements as reported by 24/7 Wall St. (1 October 2026), which also reported the terms of the consent decree, the court's approval and the 6 October closing date; the size of the offering is also given in Paramount's release headline as carried by MarketScreener. First-day trading, the order book, the ticking fee, the high-grade yield comparison, changes to the financing package and the quotations from Dennis Cinelli and Leon Kalvaria are from Bloomberg's reporting as summarised by Yahoo Finance (2 October 2026); prices of the second-lien and 2036 notes and Jeff Gundlach's comment are from Barron's as cited in the same report. The new name, Ellison's quotation, the ticker and exchange move and the deal value are from The Hollywood Reporter (2 October 2026). Treasury yields are from the US Treasury's daily par yield curve. Accurate to 1pm ET on 4 October 2026.
Topics marketswarner bros discoverybondscorporate debtmergersmedia
