Brian Chappatta, Columnist

Netflix Is Bingeing on Debt for All the Right Reasons

The company has little choice but to issue more debt. That’s all part of the plan.

October 22, 2018 at 3:57 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.

Investing for the long term.
Photographer: Chris Ratcliffe/Bloomberg

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Netflix Inc. is going back to the well. The streaming giant is selling $2 billion of junk-rated bonds to keep up its torrid pace of acquiring and funding new programming.

At first glance, this offering, which will include both dollar- and euro-denominated senior unsecured notes, seems to fit the mold of a recent $2 billion sale by Uber Technologies Inc. Both are known just as much for their global reach as their penchant for burning through cash. According to Stephen Flynn at Bloomberg Intelligence, Netflix will probably have annual cash-flow deficits in the $3 billion range, giving it little choice but to turn to the speculative-grade market to bridge the shortfall. It has done so at least once a year since 2013.