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Sprint (S), the No. 4 domestic wireless carrier, has announced a new note offering in an effort to raise up to $3.5 billion in cash. Before you get too excited about buying some of these notes, the offering is a private placement. Sprint is selling wireless spectrum licenses and third-party leased license agreements to its subsidiaries, which will issue the notes. These subsidiaries will then lease back the spectrum to the parent company Sprint, and that leasing cash flow will service the debt.

The spectrum that is backing the notes will be a portion of the company's 2.5 GHz and 1.9 GHz holdings, and is valued at $16.4 billion. Sprint expects the notes to earn investment grade credit ratings by at least two of the major credit rating agencies.

Why is Sprint doing this?

This offering was expected, as CFO Tarek Robbiati signaled the company's intention to raise cash against spectrum earlier this year. This is the third cash raise over the past year that has a similar leaseback structure, but most of the other deals related to physical assets like inventory or network equipment.

Using spectrum is sort of a strange move, and it may imply that Sprint is running out of other physical assets to pledge.

Debt maturities on the horizon

Sprint has long been saddled with a hefty debt load, more so than any of its competitors. As of the end of June, the company had $5.6 billion in current long-term debt and capital leases that comes due within the next year. Maturities in 2017 are more modest, with $1.7 billion due. But 2018 and 2019 have over $3 billion in debt maturities each.

Image source: Sprint 10-Q.

That's nearly $8 billion in debt that Sprint will need to either refinance or repay between 2017 and 2019. Meanwhile, the company still needs to wage war on the network front, which really boils down to capital expenditures. Unsurprising given their deep pockets, AT&T and Verizon ranked among the largest capital spenders in 2015 in almost any industry, according to a recent study by the Progressive Policy Institute, spending $18.7 billion and $16.5 billion, respectively.

At the end of last quarter, Sprint had $5.1 billion in cash and short-term investments. The successful completion of this offering will increase that total to $8.6 billion, and cash flow has been improving at the company. Sprint expects fiscal 2016 to break even in terms of adjusted free cash flow.