S&P rates WeWork B, notes B+

S&P said it assigned its B corporate credit rating to WeWork Cos. Inc.

The outlook is stable.

At the same time, the agency assigned a B+ issue-level rating to the company's proposed senior notes. The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; rounded estimate: 85%) in the event of payment default.

S&P said the rating reflects WeWork's substantial growth investments and resulting negative cash flow, duration mismatch between its long-term lease obligations and short-term member contracts, exposure to an entrepreneurial workforce vulnerable to economic cycles and participation in a relatively early stage, highly competitive market.

Partially offsetting these risks are the company's large cash position, positive working capital, technological capabilities, operational and cost efficiencies, solid position in developed markets, growing scale within the co-working space and associated network benefits, the agency said.

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