Moody’s dropped its ratings of WeWork, saying it didn’t have enough information to evaluate the company’s creditworthiness.
Moody’s wasn’t being paid for the rating, Bloomberg reported. In April, the rating agency graded WeWork’s $702 million of unsecured debt on the lowest speculative-grade tier. Its assessment was lower than that of ratings agencies S&P and Fitch.
The junk ratings underscore the challenge of evaluating creditworthiness of startups that tout growth but have negative free cash flow, the report said. Moody’s rated the company B3, six notches into the junk spectrum. Strong demand had led WeWork to increase the size of its bond deal by 40 percent.
WeWork, which is seeking a new round of funding that would value it at about $35 billion, has at least $18 billion in lease obligations, including $5 billion due by 2022. The Adam Neumann-led company doubled its revenues in 2017 to $866 million, but it also more than doubled its losses to $933 million. The average revenue it makes per customer declined by 6.2 percent to $6,928.
Last month, WeWork said it’s launching a real estate advisory business that offers brokerage services. The program will represent companies and help them secure office space outside of WeWork’s locations.