NETFLIX is testing potential investor interest for its first investment-grade bond sale that would help refinance US$1.8 billion of maturities, according to sources with knowledge of the matter.
The sale is expected to include notes maturing in at least ten years or longer said the sources, who asked not to be identified because the discussions are private. Morgan Stanley, Goldman Sachs, JPMorgan Chase and Wells Fargo arranged an investor call held on Monday (Jul 29).
A spokesperson for Netflix declined to comment. Representatives from Morgan Stanley, Goldman Sachs and Wells Fargo also declined to comment while JPMorgan did not immediately respond.
‘Healthy balance sheet’
The potential offering is the first since the world’s largest streaming TV service was upgraded from junk in March last year. Last week, both Moody’s Ratings and S&P Global Ratings raised Netflix’s ratings higher into investment grade, further securing its blue-chip status.
S&P upgraded Netflix two notches to A from BBB+, citing the company’s “mid-teens per cent revenue growth” and material margin expansion that has reduced leverage to 1.1 times from 1.6 times at the end of 2022.
Moody’s cited similar reasons when it elevated Netflix ratings one notch to Baa1 from Baa2, adding that it expects the company to maintain a disciplined approach towards sustaining a “healthy balance sheet and keeping ample liquidity”.
Netflix extended its lead over competitors, adding eight million customers in the second quarter and raising estimates for annual sales and profit margins. The subscriber results topped expectations in every region around the world.
Netflix has about US$1.8 billion of US dollar and euro-denominated bonds maturing next year, according to data compiled by Bloomberg, and about US$12.2 billion in long-term debt as at Jun 30, according to a company filing.
The company last tapped the primary debt markets in April 2020 when orders for its US$1 billion offering, split between US dollars and euros, were about ten times the offering size, according to sources familiar with the matter. BLOOMBERG
