Netflix is raising cash, seeking to secure $1.8 billion in a new debt offering.
The company says it will use the cash to refinance existing debt that is coming due in the next year, and for “general corporate purposes,” per a securities filing filing. The streaming giant, it should be noted, is expanding its content offering over the next year to include the WWE (to the tune of around $500 million per year) as well as a pair of NFL games on Christmas Day, which will cost it low to mid nine figures.
“Our management will have broad discretion in the application of the net proceeds, and the purposes for which they are used may change from those described above,” the company wrote in its prospectus. Netflix previously said that it was planning to refinance $1.8 billion in debt maturities.
Still, the debt offering is notable, as it is the first since the company was elevated to investment-grade status by Moody’s and S&P Global. Both ratings agencies further upgraded the streaming giant earlier this month, with Moody’s rating the company at Baa1, and S&P Global giving it an “A” rating, both firmly in blue chip territory.
The new offerings include $1 billion at 4.90 percent, which would come due in 2034, and $800 million at 5.4 percent, which would come due in 2054.
Netflix last raised cash via a debt offering in April 2020.
The company currently has about $14 billion in debt outstanding, making it less levered than many traditional media companies, some of which (like Paramount Global) have lost their investment-grade ratings in recent years.
“The stable outlook on Netflix reflects our expectation that it will maintain its global leadership position in streaming video,” S&P Global wrote in its upgrade note earlier this month. “We expect the company to generate 10 percent-15 percent revenue growth over the next two years due to its higher subscriber base and increased user monetization from price increases and advertising leading to modest margin expansion. We expect leverage to remain about 1x absent meaningful acquisitions.”
