WeWork Yields Soar Over 10% After Rating Cut Deeper Into Junk
Traders dump bonds after S&P cuts credit rating deep into junk.
(Bloomberg) -- The yield on WeWork bonds soared above 10%, close to a record level, after S&P Global Ratings slashed the co-working giant’s rating further into junk.
The company, now officially called We Co., saw its 7.875% bonds due 2025 fall 3.25 cents on the dollar to 87.75 cents as of 12:15 p.m. in New York. The yield topped 10% for the first time since March yesterday in late trading and started floating even higher this morning.
S&P reduced WeWork’s credit rating one notch to B- with a negative outlook, putting it at the edge of the market’s weakest tier of borrowers. S&P could cut its credit rating again in the next year if the company struggles to get more financing, analysts wrote in a note.
We Co., WeWork’s parent, delayed its IPO after a shaky market reception, and this week Chief Executive Officer Adam Neumann stepped down after coming under pressure from officials tied to SoftBank Group Corp., the company’s largest investor.
The company needs cash -- it’s losing millions of dollars a day and has a credit agreement that requires $500 million in cash reserves. WeWork is in talks with Goldman Sachs Group Inc. and JPMorgan Chase & Co. about a new $3 billion loan, but any such deal would require the company to raise new equity.
A representative for WeWork didn’t immediately respond to a message seeking comment.
To contact the reporter on this story: Jeremy Hill in New York at jhill273@bloomberg.net
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Dan Wilchins, Natalie Harrison
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