WeWork's junk bonds slashed again by S&P amid company turmoil, failed IPO

Daniel Strauss

September 27, 2019 7:10 PM

S&P Global downgraded WeWork's bonds further into junk territory late Thursday evening amid concerns the company might struggle to raise new capital to fund growth.

FILE PHOTO: People stand outside a WeWork co-working space in New York City, New York U.S., January 8, 2019. REUTERS/Brendan McDermid/File Photo

The rating agency lowered WeWork's credit status to "B-" from "B" and changed its outlook for the company to negative from stable.
The downgrade follows the company's failed initial public offering and an executive shake-up that resulted in co-founder Adam Neumann stepping down as CEO .
Read more stories about WeWork here .

WeWork's credit rating was downgraded deeper into junk territory late Thursday evening after the coworking company failed to pull-off its initial public offering.

S&P Global lowered WeWork's overall credit rating to "B-" from "B" and changed its outlook for the company to negative from stable. The agency cited concerns that WeWork might struggle to raise new capital to fund growth as the reason for the downgrade.

"The downgrade reflects heightened uncertainty around The We Company's ability to raise capital to support aggressive growth and the pressure this places on liquidity," S&P Global said in a statement.

The agency continued: "These uncertainties stem from the weak reception of The We Company's IPO, partly related to what we view as subpar governance practices."

The rating on WeWork's senior unsecured notes were also cut from "B+" to "B," according to S&P Global's statement .

The downgrade follows a tumultuous few weeks for WeWork. The company shelved its IPO last week over a variety of investor concerns including valuation, WeWork's path to profitability, and its leadership.

Co-founder Adam Neumann stepped down as CEO earlier this week after saying intense public scrutiny became a distraction in running the company. Neumann was replaced by two current executives Sebastian Gunningham and Artie Minson , who will serve as permanent co-CEOs.

According to S&P Global, the leadership changes might not be enough to win back investor's favor.

"Despite some improvements in governance practices subsequent to the initial filing, it is unclear whether the changes will lift investor sentiment," the agency said .

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