To get a sense of how the market feels about the day-to-day drama coming out of WeWork, investors have little choice but to turn to its bonds.
After all, the company has no publicly traded shares — and, if the latest twist in its saga is to be believed, that might be the case for longer than anticipated. Executives of WeWork and its largest investor, SoftBank Group Corp., are discussing whether to shelve plans for an initial public offering, people with knowledge of the talks told Bloomberg News. On top of that, the office-rental company may rely on junk bonds for funding for the foreseeable future or even explore a whole-business securitization, a WeWork executive said, according to a person familiar with the matter.
Not surprisingly, WeWork’s junk bonds are tumbling. They fell below 100 cents on the dollar on Tuesday for the first time since the company filed to go public last month, with both the number of trades and overall volume reaching the highest in about a month. While a dip below face value doesn’t inherently spell doom, it’s nevertheless a sign that the bad news is starting to take its toll on investors.
But here’s the mystery: Who exactly are those investors?
We know who holds about 25% of WeWork’s $669 million in high-yield debt due 2025 because Bloomberg aggregates data from the most recent public filings. So, for instance, Lord Abbett & Co. held about $43.8 million as of May 31, or about 6.5%. The second-largest holder is Allianz SE, which includes funds from Pacific Investment Management Co.; grouped together, it owns about $21 million, or a bit more than 3%. Three State Street Corp. exchange-traded funds hold a combined $9.6 million, or 1.44%. In the period through July 31, funds from TIAA-CREF and Ameriprise Financial Inc. pared back their exposure.
Still, that’s far from a complete picture. Only knowing who owns 25% of a company’s bonds is minuscule, even for the high-yield market. WeWork makes up about 0.05% of the Bloomberg Barclays U.S. Corporate High Yield Index. Here’s a sampling of other debt with nearly identical weightings and comparable maturities, and how much of its ownership is public:
• Lamar Media Corp. bond maturing in 2026: 47% known
• Seven Generations Energy bond maturing in 2025: 72% known
• J2 Global bond maturing in 2025: 51% known
• Navient Corp. bond maturing in 2021: 57% known
• Antero Resources Corp. bond maturing in 2023: 67% known
• CVR Partners LP bond maturing in 2023: 64% known