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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

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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.

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.

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.)

And likely to default again in the next 12 months

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