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Comment by gakos | Hacker News Reader

I personally don't understand the valuation, but there certainly seems to be demand for both their bonds and equity. Here's another Bloomberg article with info on their recent $700mm bond sale in April and a couple of interesting excerpts:

> The company had initially planned to sell $500 million, and then received orders of about five times that amount.

> Moody’s Investors Service rated the notes Caa1, seven steps into junk. S&P Global Ratings rated them three steps higher than Moody’s at B+, while Fitch gave them a rating of BB-, four steps higher than Moody’s.

https://www.bloomberg.com/news/articles/2018-04-25/wework-bo...

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It's because they were dangling nearly 8% yields out there. As a comparison Argentina was recently successful with a 100 year bond (!) at about the same rate. This is the same Argentina that has defaulted on its bonds eight times and as recently as 2014.

tl;dr disregard their ability to sell junk bonds

Not giving them props on their bond sale at all - I mean more that they had a huge level of interest in the sale so the market is showing a high level of interest DESPITE the junk rating. Bonds are junk when the reliability of repayment is low. I guess those investors (and anyone interested in the raise at $35b valuation) are ok with the risk.

The huge level of interest was because the huge yield, you'd have to work hard to issue debt at a higher rate. The fact they needed to offer such a yield is proof that a lot of people think they are going to fail. (Remember that the bond holders will typically be repaid before the VCs.)

Anything with a decent yield is oversubscribed in the new issue market right now. That said, these bonds were trading at 92.75 at the lows just days after being issued. New issue bonds don't trade down that low unless there's something seriously wrong with the name or if the entire market is puking.

And likely to default again in the next 12 months

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