Fitch downgrades WeWork

Fitch Ratings said it downgraded WeWork Cos. LLC and the We Co.’s long-term issuer default ratings by one notch to CCC from CCC+. Fitch also downgraded WeWork LLC’s senior unsecured notes issue rating two notches to CC/RR6 from CCC/RR5, resolving the issue-level rating watch negative.

“The downgrade reflects Fitch’s concern over the viability of WeWork’s business model in light of a potential lasting shift by companies to a hybrid office model that leads to permanently lower office space demand. While WeWork has made material progress to reduce its cash burn rate, in a scenario where demand is structurally lower, Fitch sees WeWork as potentially requiring additional liquidity sources inclusive of and beyond the full $3.3 billion SoftBank financing commitment,” the agency said in a press release.

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