Brian Chappatta, Columnist

Will Netflix Junk Bonds Wilt Amid the Content Wars?

The company has borrowed easily before, but heightened competition looms this time around.

April 23, 2019 at 6:29 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

The company will give up the cash burn, just not yet.
Photographer: Lionel Bonaventure/AFP/Getty Images

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By now, tapping the debt markets is nothing new for Netflix Inc. Just as it did in October, the streaming giant plans to issue $2 billion of junk-rated bonds denominated in dollars and euros. It has borrowed at least once a year since 2013 in an effort to build up a huge library of shows that gives subscribers a reason to renew month after month.

What is new, though, is the level of competition bearing down on Netflix from behemoths like Apple Inc., AT&T Inc. and Walt Disney Co. Bond investors ought to take the escalating content war seriously when placing orders for this new deal. After all, it could throw a wrench into the company’s timeline for turning cash-flow positive.