WeWork bondholders are not taking kindly to the co-working giant’s move deeper into junk status.
The company, now officially called We Co., saw its 7.875% bonds due 2025 fall 2.75 cents on the dollar to 88.25 cents as of 11:12 a.m. in New York. The yield topped 10% for the first time since March yesterday in late trading, and floated even higher this morning.
S&P Global Ratings 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 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.