Netflix Doesn’t Need Investment-Grade Ratings
The streaming wars are far from over. The company should press its advantage, even if it means taking on more debt.
The pandemic has been good to Netflix.
Photographer: Gabby Jones/Bloomberg
Netflix Inc. could be a rising star in the bond market. But it shouldn’t necessarily want to be one just yet.
In the parlance of credit-rating firms, investment-grade companies that are cut to junk are deemed “fallen angels.” The phrase was thrown around frequently before the coronavirus pandemic, given that hundreds of billions of dollars worth of corporate debt was one wrong step away from speculative grade. Unsurprisingly, this year’s economic crisis has tripped up household names such as Ford Motor Co., Kraft Heinz Co. and Macy’s Inc., each of which was flagged as a risk well before anyone knew the term Covid-19. S&P Global Ratings said this week that a record 126 issuers remain potential fallen angels, with 20 facing immediate downgrade pressure.