August 29, 2018 / 8:33 PM / 3 months ago

Moody's withdraws credit rating on WeWork debt in unusual move

NEW YORK, Aug 29 (Reuters) - Moody’s Investors Service said on Wednesday it withdrew its credit rating for flexible office space provider WeWork Cos and its $702 million in debt, citing insufficient information in an unusual move for a credit rating agency.

WeWork, which is controlled by affiliates of SoftBank Group Corp and reportedly valued at $35 billion, earlier in August released financial results for the first time.

“Moody’s has decided to withdraw the ratings because it believes it has insufficient or otherwise inadequate information to support maintenance of the ratings,” the agency said about its decision to no longer rate the debt that was sold in April.

WeWork only paid Fitch and S&P to rate its debt offering, so Moody’s rating was not solicited, a source close to WeWork said. It was unclear if Moody’s took part in a call with investors when WeWork reported second-quarter results on Aug. 9.

The call, or information from the call, would likely be available because of transcripts. But Moody’s would not have access to WeWork management, its leases and other financial information provided to rating agencies and investors.

Moody’s had indicated WeWork obligations represented substantial risk, according to its credit rating scale, and that WeWork’s unsecured debt was a very high credit risk.

While it is unusual for a credit rating agency to withdraw a rating, why Moody’s did not foresee a lack of information when it decided to issue an unsolicited rating is unclear.

WeWork declined to comment and Moody’s declined to comment beyond its statement.

New York-based WeWork provides office space to individuals, small companies and corporations on short-term contracts. The company has expanded rapidly worldwide on some $4.4 billion it received last year from SoftBank and related investors, in addition to funding from venture capital and other investors. (Reporting by Herbert Lash Editing by Alistair Bell)

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