Netflix, to refinance its debt, has kicked off the sale of its long-term debt securities totaling about USD 1.8 billion. According to Bloomberg, the funds raised will be used to repay debt that is set to mature in 2025.
Furthermore, Netflix filed a term sheet with the SEC in the US detailing the terms of these debt securities, where the total sum is split into two groups: USD 1 billion in 4.90% senior notes, which would be due in 2034 and another USD 800 million in 5.40% senior notes, due in 2054. According to an SEC filing, the joint book-running managers for Netflix’s debt securities sale include major financial institutions such as Morgan Stanley, JP Morgan Securities, Goldman Sachs, Wells Fargo Securities, Citigroup Global Markets, SG Americas Securities, and Santander US Capital Markets.
As per Bloomberg, the demand has been very strong as Netflix received more than $19 billion of orders for the sale of these bonds. Bloomberg’s Intelligence senior credit analyst Stephen Flynn commented that the demand was likely strong “because of the company’s solid credit metrics and smaller amount of bonds outstanding relative to other high-grade communication companies.”
This is the first debt offering for Netflix since its credit rating was bumped up from junk to investment-grade status last year, and more recently, S&P Global upgraded Netflix’s credit rating from BBB+ to A, quoting the company’s material margin expansion and its mid-teens percentage revenue growth.
Additionally, Bloomberg reported Moody’s also upgraded the streamer’s credit rating from Baa2 to Baa1, expecting that Netflix will maintain “ample liquidity” and a “healthy balance sheet”. Netflix seems to be improving upon its outstanding debt, which currently stands at USD 12.18 billion in long-term debt as of the end of June, which is down from $14.14 billion at the end of 2023, as per the company’s most recent earnings report.