In Its $500 Million Junk-Bond Market Debut WeWork May Pay Up

WeWork Cos. may pay up to help finance its aggressive global expansion.

The company is dangling preliminary yields of 7.75 percent to 8 percent to sell $500 million of bonds to investors in its inaugural deal, according to a person familiar with the matter who asked not to be named because the deal is private. Notes with comparable ratings and maturities typically yield about 5 percent, according to data compiled by Bloomberg.

The co-working space company backed by SoftBank Group Corp. joins a wave of high-flying, but cash-burning, tech firms tapping debt markets just as interest rates start to creep higher. Uber Technologies Inc. in March sought a loan even while burning through cash and posting an annual loss. Netflix Inc. borrowed $1.9 billion on Monday after allaying cash-flow concerns with continued subscriber growth.

Representatives at WeWork declined to comment beyond the company’s bond documents.

WeWork, founded in 2010 by a pair of American and Israeli entrepreneurs, is plotting a global expansion with a $4.4 billion investment from SoftBank that just this month saw it buy a Chinese startup and an office complex in London. While the New York firm’s financial metrics may be thinner than debt investors usually insist on, the success of borrowing efforts by Uber, Netflix and Tesla Inc.-- sharing the same flashy, trendy brands and devoted followers -- suggests the proposal may fly in a market wide-open and hungry for debt.

Lofty Leases

WeWork has $5 billion of lease payments due through 2022, and another $13.2 billion in 2023 and beyond

Ref. : https://www.bloomberg.com/news/articles/2018-04-24/wework-is-said-to-sell-500-million-of-junk-bonds-in-debut-sale --- Dated: Apr'24,2018