Warner Bros. Discovery Inc.’s junk bonds surged this week, handing big gains to investors that bet on the company when its future looked comparatively bleak. More such opportunities may be coming, according to money managers including Loomis Sayles & Co.
The entertainment company’s 5.05% notes due 2042 climbed more than 13 cents on the dollar on Thursday and Friday, to about 82 cents, amid reports that it might be bought by Paramount Skydance Corp., which has two investment-grade ratings. It’s a rapid turnaround for securities that were investment-grade earlier this year, but were cut to junk status amid Warner Bros. announcing it was splitting into two companies and refinancing a slug of debt.