The headlines are buzzing for a reason: Paramount Global (now Paramount-Skydance) is executing the largest leveraged buyout (LBO) in history. Following its massive $110 billion cash acquisition of Warner Bros. Discovery (WBD), the company and its lead banks (led by BofA and Citi) are working overdrive to unload a $49 billion debt package.
Thank you for reading this post, don't forget to subscribe!When Wall Street says Paramount is “pulling every lever,” here is exactly what that means.
1. The “Kitchen Sink” Financing Strategy
Because no single market can absorb a $49 billion debt wave without drowning, bankers are carving the debt into every structure imaginable to target different buyer pools:
- High-Yield & Leveraged Loans: Aimed at institutional credit funds and CLOs.
- Investment-Grade Notes: Structuring safer corporate “boxes” to lure conservative pension and insurance money.
- Euro-Denominated Debt: Tapping European credit markets to relieve pressure on U.S. liquidity.
- Subordinated Debt: Layering second-lien and unsecured notes to squeeze out every dollar.
2. Pacifying Legacy Bondholders
A massive influx of new LBO debt effectively “primes” (takes priority over) existing debt. To prevent a revolt or an expensive forced refinancing avalanche from legacy bondholders, bankers are deploying consent solicitations, sweetener fees, and debt-exchange offers to get investors to accept new positions or amended covenants.
3. Leaning on the Billionaire & Sovereign Backstop
Following a swift downgrade to BB+ (Junk status) by Fitch due to sector volatility, Paramount is using a massive equity cushion to make the debt palatable:
- The Ellison Anchor: $40 billion of the deal is backed by equity, heavily anchored by Oracle billionaire Larry Ellison (father of Paramount CEO David Ellison).
- Sovereign Wealth: Significant non-voting equity infusions from Middle Eastern sovereign wealth funds (including Saudi Arabia’s PIF) are keeping initial debt leverage from spiraling out of control.
The Deal by the Numbers
- Pro-Forma Net Debt at Close: Projected between $79B – $87B.
- Initial Leverage: A heavy 6.5x leverage ratio based on 2026 adjusted EBITDA.
- The Escape Hatch: Management is pitching $6 billion in non-labor corporate synergies (combining streaming tech, real estate, and overhead) to rapidly drag leverage down to 4.3x and regain an Investment Grade rating within 3 years.
The Bottom Line
Wall Street is watching breathlessly because failure is not an option. Due to its sheer size, Paramount-Skydance debt will automatically command a massive weighting in high-yield indexes. Credit managers have to buy it—meaning Paramount’s success in pulling these levers will dictate corporate borrowing costs and M&A appetite for the rest of the year.
