NETFLIX received more than US$19 billion of orders for its first investment-grade bond sale, according to sources with knowledge of the matter.
The streaming giant sold US$1.8 billion of debt in two parts, according to a source familiar with the matter. The longer portion of the deal, a 30-year bond, yields one percentage point over Treasuries, said the source, who asked not to be identified as the details are private. Initial price talk was a premium of about 1.3 percentage points.
Demand was likely strong “because of the company’s solid credit metrics and smaller amount of bonds outstanding relative to other high-grade communications companies”, said Bloomberg Intelligence senior credit analyst Stephen Flynn.
Proceeds will be used for purposes including the repayment of 3 per cent, 3.625 per cent and 5.875 per cent bonds all due next year, according to the source familiar. There’s a combined US$1.8 billion equivalent of the US dollar and euro notes outstanding, according to data compiled by Bloomberg.
Bloomberg reported on Monday (Jul 29) that Netflix was testing potential investor interest for the bond sale, which would be its first since 2020. In the following four years, the world’s largest streaming TV service was upgraded from junk territory. Both Moody’s Ratings and S&P Global Ratings further raised grades on the company last week, following Netflix’s release of stronger-than-expected second-quarter results.
The firm’s bond sale – managed by Morgan Stanley, Goldman Sachs, JPMorgan Chase and Wells Fargo – is part of a rush to debt markets by corporate borrowers this week ahead of central bank meetings in the US, England and Japan. Netflix’s deal adds to what has been the busiest July in seven years for US investment-grade issuance. BLOOMBERG
