WeWork joins rush to debt market with little cash

WeWork Cos. is tapping the bond market for the first time, seeking $500 million to help finance its aggressive global expansion.

The co-working space company backed by SoftBank Group joins a wave of high-flying but cash-burning tech firms tapping debt markets just as interest rates start to creep higher. Uber Technologies Inc. in March sought a loan even while burning through cash and posting an annual loss. Netflix Inc. borrowed $1.9 billion on Monday after allaying cashflow concerns with continued subscriber growth.

WeWork, founded in 2010 by a pair of American and Israeli entrepreneurs, is plotting a global expansion with a $4.4 billion investment from SoftBank that just this month saw it buy a Chinese startup and an office complex in London.

While the New York firm’s financial metrics may be thinner than debt investors usually insist on, the success of borrowing efforts by Uber, Netflix and Tesla — sharing the same flashy, trendy brands and devoted followers — suggests the proposal may fly in a market wide-open and hungry for debt.

“As a company in a sustained growth mode, WeWork is not profitable on a combined basis, as significant growth operating expenses more than offset existing property cash flows,” Fitch Ratings said in a report Tuesday.

Fitch gave the company a rating of BB-, three steps into junk. S&P Global Ratings rated the company B, five steps below investment grade, with a stable outlook.

The new notes are rated one step higher at B+.

WeWork began business by leasing office space and renting desks to New York’s creative set, with unusual work perks such as microbrews on tap and a “com-