(Bloomberg) -- WeWork Cos.’s bonds extended their losses on Tuesday, as investors who were at first enthused to get a piece of the action have since been cashing in their chips.
The $702 million of speculative-grade bonds, which sold last week at par, fell for the fourth straight day on Tuesday to 95.75 cents on the dollar, according to Trace bond-price data. That’s a sharp contrast to the outsized orders the company saw when it marketed its debt in primary markets last week.
The company had initially sought to issue $500 million of the securities, but decided to upsize once the orders came pouring in, a person with knowledge of the situation said. The seemingly odd-lot number of $702 million was chosen in part because the company considered it a lucky number, another person said.
WeWork’s deal underscored the risks investors have been willing to take in the new-issue market as they struggle to find high-yielding assets. The office-space leasing company joined a wave of high-flying cash-burning firms that have managed to recently tap debt markets, like Uber Technologies Inc. and Netflix Inc.
A representative for New York-based WeWork declined to comment on Monday. The banks which managed the sale, led by JPMorgan Chase & Co., didn’t respond to messages, while Bank of America Corp. declined to comment.
WeWork sold seven-year unsecured bonds to yield 7.875 percent on Wednesday. In addition to drawing massive orders, the company moved up pricing by a day, likely another sign of strong investor demand, CreditSights said in a report last week. WeWork initially planned to sell $500 million of bonds to fund its ongoing global expansion. The bond was the most active in the U.S. high-yield market on Monday, Trace data show.
WeWork’s bonds aren’t the first to reflect buyers’ remorse. Investors who initially lined up to buy Tesla Inc.’s inaugural bonds in August soon ran for the exits after they were sold, and the securities now trade around 88 cents on the dollar. PetSmart Inc. bonds sold at par last May also dropped after pricing and have plummeted since.
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