Netflix plans to issue long-term debt securities totaling $1.8 billion, the first debt offering for the company since its credit rating was upgraded from junk to investment-grade status last year.
The new debt offering is evidently to refinance the streaming giant’s $1.8 billion in debt that is maturing in 2025, according to data compiled by Bloomberg. Overall, Netflix had $12.18 billion in long-term debt as of the end of June, down from $14.14 billion at the end of 2023, per its most recent earnings report.
On Tuesday, Netflix detailed the terms of the new debt in a pricing term sheet in a filing with the SEC. The offering comprises two tranches: $1 billion in 4.90% senior notes due in 2034, and $800 million in 5.40% senior notes due in 2054. The banks designated as joint book-running managers are Morgan Stanley, Goldman Sachs, JP Morgan Securities, Wells Fargo Securities, Citigroup Global Markets, Santander US Capital Markets and SG Americas Securities.
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Netflix last issued $1 billion in debt in April 2020, split between dollars and euros, which were considered junk bonds.
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Last week, S&P Global upgraded Netflix’s credit rating from BBB+ to A, citing the company’s “mid-teens percentage revenue growth” and material margin expansion. Moody’s upgraded the streamer’s credit rating from Baa2 to Baa1 with the expectation that Netflix will maintain a “healthy balance sheet” and “ample liquidity,” as reported by Bloomberg.
For the second quarter of 2024, Netflix kept up its momentum, pulling in a higher-than-expected 8 million new subscribers — to stand at 277.7 million worldwide — and beating Wall Street’s financial forecasts. In the one area of concern, co-CEO Greg Peters acknowledged on the earnings interview the streamer has catch-up work to do on the ad-supported tier to close a monetization gap.
