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WeWork

Moody's Pulls WeWork Credit Ratings, Citing Lack of Information

The credit grader published an unsolicited assessment in April that ranked WeWork’s $702 million of unsecured debt in the lowest speculative-grade tier.

(Bloomberg)—Moody’s Investors Service dropped its ratings of WeWork Cos. and its inaugural bond deal, saying it didn’t have enough information to continue grading the company’s creditworthiness. WeWork’s notes declined.

Moody’s wasn’t being paid for the rating, according to a spokesman for the company that runs shared office space for tenants from startups to large enterprises. The credit grader published an unsolicited assessment in April that ranked WeWork’s $702 million of unsecured debt in the lowest speculative-grade tier. That was lower than the grades assigned by Moody’s rivals S&P Global Ratings and Fitch Ratings.

WeWork saw voracious demand for its debt bond offering, ultimately boosting the size of the deal by 40 percent. The ratings it received spanned across the junk spectrum, underscoring the difficulty of assessing the creditworthiness of startups with big ambitions but negative free cash flow.

Moody’s rated the company B3, or six steps into junk, and its seven-year unsecured bond one notch lower at Caa1. Fitch Ratings grades the notes BB-, meaning "speculative" but with adequate financial flexibility, while S&P Global Ratings assigned them B+, or “more vulnerable to nonpayment.”

The company’s bonds fell 1.5 cents on the dollar to 96.75 cents to yield 8.52 percent on Wednesday afternoon in New York, according to Trace bond price data. The average bond yielding about that amount carries a CCC+ rating, according to Bloomberg Barclays index data.

A representative for Moody’s declined to comment beyond the statement.

--With assistance from Eric Newcomer and Lisa Lee.To contact the reporter on this story: Claire Boston in New York at [email protected] To contact the editors responsible for this story: Nikolaj Gammeltoft at [email protected] Shannon D. Harrington

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