Netflix to sell $2bn of bonds in return to junk market

(iStock)
(iStock)

Netflix is returning to the junk-bond market to fund its content expansion as the company comes under pressure from media giants including Walt Disney, AT&T and Apple.

The streaming company is selling $2bn (about R28.6bn) of bonds in a two-part offering denominated in dollars and euros, according to a statement on Tuesday. The proceeds will be used for general corporate purposes that may include investing in content, production and development, the statement said.

The notes will mature in 10.5 years and can’t be bought back, according to a person with knowledge of the matter. Morgan Stanley, Goldman Sachs Group, JPMorgan Chase & Co., Deutsche Bank AG and Wells Fargo & Co. are managing the bond sale, said the person, who asked not to be identified as the details are private. The bonds are expected to price on Wednesday.

Netflix is coming off a quarter in which its forecast for new subscribers fell short of analysts’ estimates. It’s been raising prices in some of its largest territories, trying to shift toward profitability when the competition among other streaming services is mounting.

Los Gatos, California-based Netflix has traditionally borrowed semiannually following its first and third quarter results in April and October, respectively, amassing a $10bn debt load in the process. But Chief Executive Officer Reed Hastings said the issuance may not last much longer as the company will soon be able to fund itself. It’s still expecting to burn through $3.5bn of cash this year, but its financing needs will start to abate in 2020.

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