WeWork Bond Prices Surge on Buyback Hopes -- Update
August 15 2019 - 5:39PM
Dow Jones News
By Matt Wirz
WeWork Co.'s debt is surging following the company's S-1 filing
for a proposed IPO, as investors bet the company could retire bonds
before they mature in 2025.
The price of the $699 million bond jumped 3% Thursday to 105.292
cents on the dollar and is up 7.4% since Tuesday, before the
company filed the S-1, according to data from MarketAxess. About
$330 million of the bonds changed hands in the past two days, the
most active trading since WeWork issued them in April of 2018,
according to MarketAxess.
WeWork hopes to raise $3 billion to $4 billion in the IPO, The
Wall Street Journal previously reported, as well as up to $6
billion by issuing secured loans, according to the S-1. About $3
billion of the loans would be immediately available to the company
after the IPO, with the balance available in two later
installments.
But WeWork's ability to borrow the two final installments of the
new loans would be restricted by the indenture of its existing
bonds, according to the S-1. The company may "explore a variety of
new financing and/or refinancing transactions, including with
respect to the senior notes," according to the S-1.
A spokeswoman for WeWork declined to comment.
The new cash from an IPO and the planned loans would support the
office-rental company's growth needs, but it will likely continue
to burn cash as it expands, according to a report Wednesday by
S&P Global Ratings, which rates WeWork single-B. The ratings
firm assumes the bonds will remain outstanding in its analysis.
WeWork bonds were the second most-actively traded bonds in the
U.S. Thursday behind the debt of General Electric Co. GE's 30-year
bond fell 6% to 89.25 cents on the dollar Thursday, according to
MarketAxess, after Harry Markopolos published a report alleging
fraudulent financial filings by the conglomerate.
U.S. government bonds continued to rally Thursday with the yield
on the benchmark 10-year Treasury note trading at 1.534%, down from
1.596% Wednesday. Yields fall as bond prices rise.
Write to Matt Wirz at matthieu.wirz@wsj.com
(END) Dow Jones Newswires
August 15, 2019 17:24 ET (21:24 GMT)
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