S&P Cuts Netflix Rating Further Into Junk Territory

Standard & Poor's on Monday downgraded its credit rating on streaming video provider Netflix Inc. to B-plus from BB-minus, moving the rating further into speculative, or junk territory. The agency has a negative outlook on the rating, meaning it could downgrade again in the medium term. "The downgrade and negative outlook reflects our expectation that Netflix will incur significant discretionary cash flow deficits over the next several years and that debt leverage will be high during that time," S&P said in a statement. Netflix earlier announced that it is planning to issue $1 billion in senior unsecured notes, raising its debt leverage to about 5 times by the end of 2015 from about 1.9 times at the end of 2014, said S&P. Shares fell 0.6% in early trade, but are up 11.6% in the past three months, while the S&P 500 has fallen 1%.

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