Netflix Inc. (NASDAQ: NFLX) is joining the waves of companies that have raised cash at low interest rates in the past couple of months. While interest rates are low in the United States, Netflix is making a debt offering, partly in Europe, to capture even lower interest rates.
The streaming media giant plans to offer approximately $2.0 billion worth of U.S. dollar-denominated and euro-denominated senior unsecured notes in two series. These will be private placements in the United States and Europe to qualified investors.
Terms have not yet been set, but the yield on the 10-year Treasury note of 1.78% is more than 200 basis points higher than the −0.35% yield of the 10-year bund in Germany.
Netflix said that it intends to use the net proceeds from this offering for general corporate purposes. Those purposes include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions. As far as additional terms, the press release had the canned language:
The interest rate, redemption provisions, maturity date and other terms of each series of Notes will be determined by negotiations between Netflix and the initial purchasers.
Netflix currently has a market cap of roughly $120 billion. As of June 30, 2019, the company has $12.42 billion in long-term debt and another $4.4 billion listed in the non-current liabilities. That long-term debt was already $2 billion higher than it was at the end of 2018.
Shares of Netflix were trading down about 1.7% at $270.60 on Monday, and its 52-week trading range was $231.23 to $385.99.
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