Netflix is on a financial roll, raising $1.8 billion in a new debt offering to fuel its growth and manage existing liabilities. The funds will be used to refinance upcoming debt maturities and for “general corporate purposes,” according to a recent securities filing.
The streaming titan is gearing up for major content investments, including a substantial deal with WWE worth approximately $500 million annually and exclusive NFL games on Christmas Day, which will require a significant investment in the low to mid nine figures.
Netflix’s prospectus highlights that the company’s management will have significant flexibility in how the proceeds are used, which may evolve over time. This debt issuance is noteworthy as it marks Netflix’s first offering since being upgraded to investment-grade status by Moody’s and S&P Global. Moody’s has rated Netflix at Baa1, while S&P Global has given it an “A” rating, reflecting its strong financial position.
The new debt package includes $1 billion at a 4.90% interest rate, maturing in 2034, and $800 million at 5.4%, maturing in 2054. This offering follows Netflix’s last debt issuance in April 2020.
Currently, Netflix holds approximately $14 billion in debt, positioning it better than some traditional media rivals, like Paramount Global, which have faced downgrades in their investment-grade ratings. According to S&P Global, Netflix’s stable outlook is based on its global dominance in streaming, with expected revenue growth of 10% to 15% over the next two years. This growth is anticipated to come from a larger subscriber base, increased monetization strategies, and advertising revenue, leading to moderate margin expansion. The company’s leverage is expected to stay around 1x unless significant acquisitions occur.
