Warner Bros. Discovery (WBD) this week wrapped its $15 billion-equivalent cross-border time period mortgage B financing, a record-setting deal for transaction dimension within the leveraged mortgage market.
WBD goes into the document books because the second-largest TLB syndication of all time, trailing solely the $16.45 billion TXU deal in 2007. For added context, there have solely been three USD institutional mortgage offers ever totaling $10 billion or extra, and two of these had been earlier than the World Monetary Disaster. That makes WBD the biggest TLB transaction post-GFC, each by the $15 billion complete facility dimension and by the $13 billion US greenback tranche dimension, topping Broadcom’s November 2015 deal at $10.74 billion throughout US and European services ($9.75 billion in USD). It is usually the biggest mortgage ever issued by a non-sponsored borrower.
Last tranche sizes for WBD had been $13 billion for the US dollar-denominated TLB and €1.717 billion for the euro mortgage. Last pricing for the seven-year time period loans got here tight to speak for each unfold and OID at S/E+250 with a 99.75 OID. Steering at launch was S/E+275-300 at 99. Proceeds shall be used to refinance a bridge mortgage the corporate obtained final yr, forward of the closing of its acquisition by Paramount Skydance Corp.
Emergence of the deal got here amid a dry season for brand spanking new M&A provide and is thus contorting quantity figures by its sheer dimension. Take into account that the whole institutional mortgage provide within the US from LBO and M&A transactions in Might was $17.7 billion (as of Might 27), roughly according to March, with WBD accounting for 73%. Company M&A quantity jumped to $15.1 billion in Might, greater than the mixed complete of January-April, and marking the best month-to-month determine since January 2020.
Not solely did this deal from a debut issuer provide recent provide to a starved market — certainly, it was upsized from the $5 billion and €1 billion tranche sizes on the preliminary launch — it got here as buyers are leaning into higher-quality debtors. As of Might 26, 63% of loans from BB- rated debtors within the Morningstar LSTA US Leveraged Mortgage Index had been priced at par or increased. That share was at a 2026 excessive of 76% earlier in Might after falling as little as 13% in late March and early April.
Regardless of the dearth of acquisition-related issuance, the market has staged a comeback, led by higher-quality names, from a difficult interval earlier this yr. For B+ and B issuers, present shares of loans priced at par and above are 48% and 40%, each up from single digits in early March, whereas B- debtors lag at 16% (up from 2% on March 2). Corporations have taken benefit of the situations through a wave of refinancing and repricing offers in latest weeks. Speculative-grade debtors have repriced $50.5 billion of time period loans in Might, up from simply $11.8 billion in February by April mixed, with firms rated BB- accounting for 51% of that quantity.
