Here are the top highlights from this week's edition of Moody's Credit Outlook:
Featured News and Analysis
Oracle's contract backlog growth is enormous, but supporting the growth carries risks
On 10 December, Oracle Corp. (Baa2 negative) said its remaining performance obligation (RPO) backlog rose to a staggering $523 billion for the quarter ended 30 November, up $68 billion since the 31 August period. The increase in contract backlog is impressive, though the counterparty risk and spending and commitments required to support that growth remain significant credit concerns and primary drivers of the rating's negative outlook.
Paramount's $108 billion hostile bid for Warner Bros. carries significant risk, but makes strategic sense
On 7 December, Paramount Global's (Baa3 negative) parent company Paramount Skydance said it made an all-cash tender offer for the shares of Warner Bros, Discovery Inc. (WBD, Ba1 review for downgrade) at $30 per share, or about $108.4 billion of total enterprise value. The hostile bid follows WBD's definitive agreement to sell its film and television studios and HBO streaming business to Netflix, Inc. (A3 stable).
Netflix's acquisition of Warner Bros. would enhance product offering but briefly raise leverage
On 5 December, Netflix Inc. (A3 stable) and Warner Bros. Discovery, Inc. (WBD, Ba1 review for downgrade) announced they had entered a definitive agreement for Netflix to acquire Warner Bros. (WB), including its film and television studios, HBO Max, and HBO streaming and studio assets. Netflix will assume around $10.7 billion of net debt from WBD, issue $50 billion of new debt, issue $11.7 billion of Netflix equity to existing WBD shareholders, and use around $10.3 billion of balance sheet cash.
IBM's planned acquisition of Confluent would likely create large revenue and cost synergies
IBM plans to finance the acquisition with cash on hand and expects the acquisition to close by the middle of 2026. The purchase price is about 10x Confluent's expected 2025 revenue of $1.1 billion. (Confluent's revenues grew 19% in the September 2025 quarter.)
Campbell's La Regina acquisition is moderately leveraging but strategically sound
On 9 December, The Campell’s Company (Baa2 stable) announced plans to acquire a 49% interest in La Regina di San Marzano di Antonio Romano S.p.A. and La Regina Atlantica, LLC (together, La Regina), the privately held maker of Rao’s tomato-based pasta sauces, for a total consideration of $286 million.
Credit in Depth
European consumers are likely to remain cautious even as the outlook for the bloc's economy shows signs of improvement. We expect household spending to slowly recover in 2026, in line with our economic outlook. Inflation has eased and real incomes are recovering yet political and trade tensions continue to weigh on consumer confidence. Households are spending selectively and savings remain high, reflecting caution despite resilient labour markets and improved conditions.
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