Warner Bros./Paramount Skydance deal spawns $15B leveraged loan, largest since Global Financial Crisis

WBD goes into the grounds books arsenic the second-largest TLB syndication of each time, trailing lone the $16.45 cardinal TXU woody successful 2007. For further context, determination person lone been 3 USD organization indebtedness deals ever totaling $10 cardinal oregon more, and 2 of those were earlier the Global Financial Crisis. That makes WBD the largest TLB transaction post-GFC, some by the $15 cardinal full installation size and by the $13 cardinal US dollar tranche size, topping Broadcom’s November 2015 woody astatine $10.74 cardinal crossed US and European facilities ($9.75 cardinal successful USD). It is besides the largest indebtedness ever issued by a non-sponsored borrower.

Final tranche sizes for WBD were $13 cardinal for the US dollar-denominated TLB and €1.717 cardinal for the euro loan. Final pricing for the seven-year word loans came choky to speech for some dispersed and OID astatine S/E+250 with a 99.75 OID. Guidance astatine motorboat was S/E+275-300 astatine 99. Proceeds volition beryllium utilized to refinance a span indebtedness the institution obtained past year, up of the closing of its acquisition by Paramount Skydance Corp.

Emergence of the woody came amid a adust play for caller M&A proviso and is frankincense contorting measurement figures by its sheer size. Consider that the full organization indebtedness proviso successful the US from LBO and M&A transactions successful May was $17.7 cardinal (as of May 27), astir successful enactment with March, with WBD accounting for 73%. Corporate M&A measurement jumped to $15.1 cardinal successful May, much than the combined full of January-April, and marking the highest monthly fig since January 2020.

Not lone did this woody from a debut issuer connection caller proviso to a starved marketplace — indeed, it was upsized from the $5 cardinal and €1 cardinal tranche sizes astatine the archetypal motorboat — it came arsenic investors are leaning into higher-quality borrowers. As of May 26, 63% of loans from BB- rated borrowers successful the Morningstar LSTA US Leveraged Loan Index were priced astatine par oregon higher. That stock was astatine a 2026 precocious of 76% earlier successful May aft falling arsenic debased arsenic 13% successful precocious March and aboriginal April.

Despite the dearth of acquisition-related issuance, the marketplace has staged a comeback, led by higher-quality names, from a challenging play earlier this year. For B+ and B issuers, existent shares of loans priced astatine par and supra are 48% and 40%, some up from azygous digits successful aboriginal March, portion B- borrowers lag astatine 16% (up from 2% connected March 2). Companies person taken vantage of the conditions via a question of refinancing and repricing deals successful caller weeks. Speculative-grade borrowers person repriced $50.5 cardinal of word loans successful May, up from conscionable $11.8 cardinal successful February done April combined, with companies rated BB- accounting for 51% of that volume.