Price talk is out for the investment grade portion of Paramount Skydance’s $52bn debt syndication this week to fund its acquisition of Warner Bros Discovery, and banks are offering investors steep spread concessions and yields that would rank among the highest still outstanding in the IG bond market.
The new debt led by Bank of America and Citi spans $30bn of first-lien IG-rated senior secured bonds that could offer a coupon as high as 8% on 10-year debt based on initial price thoughts, and yields could climb to over 9% on the long bonds.
According to a 9fin screener, only the agricultural chemicals company FMC Corp has at least two IG instrument ratings on senior secured debt with an 8% coupon or higher. And only a handful of sizable unsecured IG-rated debt outstanding still hits those levels.
“We're starting to see coupons that we haven't seen in forever in IG land,” one tech analyst said. “There are not many coupons like this that I've come across in my career.”
Treasury benchmark as of market close 28 September (Source: 9fin)
Investors remain skeptical of the business combination, but at these prices, the deal is garnering a lot of...
