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
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.
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