>> Netflix is swimming in new subscribers and drowning in debt. In less than three years Netflix has issued $7.5 billion in high risk isle use known as junk bonds and that number is about to get even bigger. The streaming video service, Monday announcing it's borrowing another $2 billion as it goes back to the bond market for the second time this year.
Reuters' debt market correspondent, Kate Duguid.>> Netflix at the moment is burning through a ton of cash. They're raising debt in order to fund things like content acquisition. So Netflix has started producing its own shows, which are very expensive, and continues to try to buy licenses for existing media.
All that has meant that they've raised more than $10 billion in fact since they went public in 2002.>> So far the borrowing and buying strategy is paying off. Netflix's subscriber numbers rose to 137 million worldwide last quarter, as it looks to fight off challenges from Amazon Prime Video, Hulu, and the major new kid soon to hit the block, Walt Disney.
But Netflix's heavy debt load is weighing on investor sentiment. Negative bets against Netflix bonds have more than tripled this year to an all time high according to data from IHS market. And Netflix stock is down 22% from its all time high in June, though still up a whopping 71% so far this year.
Netflix is not alone in tapping the costlier side of the corporate borrowing market with junk bond issuance at a trillion dollars this year.>> Because we're in a low rate environment, investors are still on a hunt for yield. And one of the few places that that's still available is in the junk bond market.
So, there's tons of demand for junk bonds like the one Netflix issued today.>> When they bury me, it won't be in my backyard.>> But buyers beware, if the economy starts to sputter, some fear all this risky lending could tumble, leaving investors with a big hole in their pockets.