Paramount's New Junk Bonds Tumble, Yields Spike Past 10%
PSKY sits 25% above its 52-week low of $7.62.
Summary
Paramount's newly issued debt is trading poorly in the secondary market, with the $6B second-lien notes falling over 2% to $97.50 and existing 10-year bonds plunging 6 points to $79, pushing yields above 10%. The selloff signals investor concern about the company's massive leverage after the $81B Warner Bros. Discovery acquisition, which is set to close next Tuesday. The stock dropped 4.7% to $9.85 in sympathy, and shares of other media companies also fell as Paramount got closer to the Warner acquisition. This follows the $44.4B notes offering launched on September 28 and the consent decree resolving the multi-state antitrust lawsuit on September 30. The bond market's negative reaction raises the cost of future refinancing and underscores execution risk for the company's aggressive deleveraging targets. Watch for the deal closing next Tuesday and any further spread widening in the new bonds.
At the time of this announcement, PSKY was trading at $9.51 on NASDAQ in the Trade & Services sector, with a market capitalization of approximately $10.7B. The 52-week trading range was $7.62 to $19.45. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: Dow Jones Newswires.