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SoftBank Offloads $550 Million of WeWork Rescue Debt

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SoftBank has officially sold $550 million of its $2.2 billion rescue debt package that it provided WeWork over a year ago. 

According to reports, SoftBank offloaded around a quarter of the debt package, which carried a 5% coupon and will mature in July of 2025 at 86 cents on the dollar. 

The price brought the yield bonds to 9.75%, which is above the yield on WeWork’s current debt. 

“The commitment from a broad set of investors indicates a continued support for WeWork’s long-term vision and an ongoing belief in the success of the business,” the company said in a statement.  

This sale puts pressure on the coworking firm’s other debts. For instance, the bond maturing in 2025 with a coupon of 7.875% fell from 98 cents on the dollar to 95 cents over the past month. 

Credit ratings agency Fitch gave the bonds a C minus, which is one level above default. However, Fitch believes that WeWork has enough cash to continue operating. 

“A high degree of uncertainty remains surrounding the office market environment, Covid-19 and exogenous shocks including the evolving Omicron coronavirus variant,” said Kevin McNei, an analyst at Fitch. “WeWork would require additional liquidity sources if the office market remains depressed for an elongated period.” 

The news of the sale follows a sequence of less than favorable headlines for WeWork; in November, the company’s third quarter earnings report disclosed a net loss of $844 million, and a financial filing error revealed WeWork had misclassified some of its public shares, causing the company’s stock to drop more than 5%.

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