Netflix Levers Up (again)

From Dow Jones Newswires (emphasis mine):

Netflix Inc. (NFLX) said Monday it is planning to tap the high-yield bond market with a $1.5 billion deal. The company said it will use the proceeds for general corporate purposes, including content acquisition, production and development, capex, investments, working capital and potential acquisitions and strategic deals. The company’s most active bonds, the 4.875% notes that mature in April of 2028, last traded at 96.50 cents on the dollar to yield 5.332%, or at a yield spread of 239 basis points over Treasurys, according to trading platform MarketAxess.

I’m not going to belabor the point here. You can decide for yourself whether 5.332% is appropriate compensation for lending on a 10-year term to a company management says will burn $3bn to $4bn of free cash in 2018.

Disclosure: No position.

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