WeWork has revealed that their bonds have experienced losses recently, as those who hopped on the bonds immediately are already turning them in for money.
The $702 million of speculative-grade bonds, which sold last week at par, fell for the fourth straight day on Tuesday to 95.75 cents on the dollar, according to Trace bond-price data. That’s a sharp contrast to the outsized orders the company saw when it marketed its debt in primary markets last week.
The company had initially sought to issue $500 million of the securities, but decided to upsize once the orders came pouring in, a person with knowledge of the situation said. The seemingly odd-lot number of $702 million was chosen in part because the company considered it a lucky number, another person said.
WeWork’s deal underscored the risks investors have been willing to take in the new-issue market as they struggle to find high-yielding assets. The office-space leasing company joined a wave of high-flying cash-burning firms that have managed to recently tap debt markets, like Uber Technologies Inc. and Netflix Inc.
A representative for New York-based WeWork declined to comment on Monday. The banks which managed the sale, led by JPMorgan Chase & Co., didn’t respond to messages, while Bank of America Corp. declined to comment.
WeWork sold seven-year unsecured bonds to yield 7.875 percent on Wednesday. In addition to drawing massive orders, the company moved up pricing by a day, likely another sign of strong investor demand, CreditSights said in a report last week. WeWork initially planned to sell $500 million of bonds to fund its ongoing global expansion. The bond was the most active in the U.S. high-yield market on Monday, Trace data show.
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