Fitch Ratings downgraded Paramount Skydance Corp.'s credit rating to BB+, the highest junk rating, following its $110 billion acquisition of Warner Bros. The downgrade positions Paramount to become one of the largest borrowers in the US high-yield bond market as it absorbs Warner's substantial debt load.

Paramount last week agreed to purchase Warner Bros. after a months-long battle with Netflix, including a $57.5 billion bridge loan that will be refinanced with investment-grade and high-yield debt. The company already had approximately $15 billion in short- and long-term debt as of December 31, according to Bloomberg data. S&P Global Ratings had previously assigned Paramount a BB+ rating.

Warner Bros. alone carries about $15.2 billion in junk bonds, making it the third-largest borrower in Bloomberg's US junk bond index. The combined entity's total high-yield debt remains unclear, as Paramount plans to secure much of its borrowing through investment-grade channels. Moody's and S&P have both indicated potential further downgrades could push Paramount deeper into junk status, which would increase borrowing costs and force some institutional investors to sell their holdings.