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Netflix is poised to raise a €1bn 10-year bond on Wednesday, as the US streaming service looks to fund its international expansion and shift to developing more original content.

Banks are marketing the company’s debut euro bond sale at yields of 3.75 per cent to 4 per cent. Two investors said they thought the junk-rated company might also increase the deal’s size, on the back of strong demand.

Despite the bond’s sub investment-grade B1 and B+ ratings from Moody’s and S&P, the deal has none of the usual protections that investors often demand to lend to riskier borrowers.

Netflix is far from generating the cash needed to service its growing debt pile, burning through more than $1.8bn of free cash flow in the 12 month’s ending March 31, according to the bond’s documentation.

Investors buying the deal will look to the US-listed company’s more than $65bn market cap for comfort, however, while yields on offer look generous compared to Netflix’s $1bn note yielding 4.5 per cent that has a narrower spread over the relevant sovereign benchmark.

Morgan Stanley, JP Morgan, Goldman Sachs and Deutsche Bank are running the deal.

Copyright The Financial Times Limited 2017. All rights reserved.
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