Netflix Bonds Backed by Whim of Creativity

Netflix Inc. is selling bonds again, which should not come as a surprise. The internet subscription service has few other options to pay the estimated $11.5 billion bill next year for its streaming entertainment programming. The company doesn't make money; it's burning through cash and doesn't expect to break even for a long time.

But what is surprising is that debt investors are so willing to jump on board. They're financing a company that needs one hit show after another in a notoriously fickle industry to thrive into the next decade. And bond buyers are accepting materially lower yields on Netflix debt than comparably rated borrowers.

Netflix said on Monday that it planned to sell $1.6 billion more debt, with proceeds going toward "general corporate purposes." Bloomberg Intelligence analyst Stephen Flynn estimates Netflix may sell up to $1.4 billion in additional bonds over the next 12 months. Netflix has been clear that it will continue to sell debt so it can keep pouring money into new shows, with its programming expenditures growing a shade faster than revenue in the last couple of years.