Bulletin: Netflix Inc. Ratings Unaffected By Debt Add-On

CHICAGO (Standard&Poor's) Feb. 4, 2015--Standard&Poor's Ratings Services said today that its ratings and outlook on Netflix Inc. (B+/Negative/--) are not affected by the company's upsizing of its bond offering to $1.5 billion from $1 billion. The upsized bond offering consists of $700 million senior unsecured notes due 2022 and $800 million senior unsecured notes due 2025. Netflix plans to use the add-on to fund its investments in original programming and international expansion. Although the larger debt offering will increase our expected peak debt leverage to 6.2x by year-end 2015 from about 5x, the chief risk to the existing rating remains Netflix's ability to deleverage meaningfully in 2016 by growing its subscriber base and narrowing its international

...CHICAGO (Standard & Poor's) Feb. 4, 2015--Standard & Poor's Ratings Services said today that its ratings and outlook on Netflix Inc. (B+/Negative/--) are not affected by the company's upsizing of its bond offering to $1.5 billion from $1 billion. The upsized bond offering consists of $700 million senior unsecured notes due 2022 and $800 million senior unsecured notes due 2025. Netflix plans to use the add-on to fund its investments in original programming and international expansion. Although the larger debt offering will increase our expected peak debt leverage to 6.2x by year-end 2015 from about 5x, the chief risk to the existing rating remains Netflix's ability to deleverage meaningfully in 2016 by growing its subscriber base and narrowing its international losses. We believe these two factors will likely be necessary for Netflix to maintain the 'B+' corporate credit rating. Based on our expectation for significant discretionary cash flow deficits over the next several years (driven...

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