WeWork to Sell $500 Million of Junk Bonds in Debut Sale

• April 24 2018
• Molly Smith

WeWork Cos., a co-working space company backed by SoftBank Group Corp., is selling bonds as the New York-based startup continues its rapid expansion.

WeWork Cos., a co-working space company backed by SoftBank Group Corp., is selling bonds as the New York-based startup continues its rapid expansion.

The company is issuing $500 million of seven-year senior bonds, according to a person with knowledge of the matter. The proceeds will be used for general corporate purposes and are expected to price April 26, the person said, asking not to be identified as the details are private.

This marks WeWork’s first trip to the bond market since its 2010 founding. The startup agreed to a $4.4 billion investment from Japan’s SoftBank and its Vision Fund in August, which increased the company’s valuation to about $20 billion at the time. That financing allowed some shareholders to cash out, as well as advance an aggressive global expansion that has most recently picked up steam in Japan.

S&P Global Ratings grades the company B, five steps below investment, with a stable outlook. The unsecured notes are rated one step higher at B+. WeWork could significantly increase the size of the bond sale based on investor demand, which is currently being marketed to U.S. investors, the Financial Times reported Monday, citing five people with knowledge of the planned sale.

JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., HSBC Holdings Plc, Morgan Stanley, UBS Group AG and Wells Fargo & Co. are managing the sale, the person said. The banks are holding an investor call Tuesday at 11 a.m. New York time.

— With assistance by Gowri Gurumurthy