Paramount Bonds Sink to 96 Cents After $110 Billion WBD Deal Financing
Updated
Updated · Quartz · Oct 2
Paramount Bonds Sink to 96 Cents After $110 Billion WBD Deal Financing
3 articles · Updated · Quartz · Oct 2
Summary
$100 million-plus in paper losses hit investors after Paramount’s new eight-year dollar notes fell to about 96 cents on their first trading day, while the stock dropped 9.6%.
The selloff followed a rushed debt raise for Paramount’s $110 billion Warner Bros. Discovery acquisition, with the company facing roughly $7 million a day in payments if the deal stayed unclosed after Oct. 1.
Junk debt led the decline: $6 billion of 8.25% second-lien notes due 2031 traded at $97.50, and credit-default swap costs climbed to a 17-year high.
Existing Paramount bonds also weakened because the new debt ranks ahead of them; its 6.875% 2036 bonds fell to $79 from $85, pushing the yield to 10.4% from 9.25%.
Underwriters Bank of America and Citigroup drew investor complaints after a touted $109 billion order book thinned when pricing tightened, though Paramount and Citi called the move one-day market choppiness ahead of an Oct. 6 close.