Tesla Semi Truck
Tesla gigafactorys
SolarCity
Tesla South Sweden
Tesla (TSLA) secures Model S, 3, X bonds quickly for a steal
Victor Colstrup 07/31/2020 07/31/2020 No Comments on Tesla (TSLA) secures Model S, 3, X bonds quickly for a steal
Tesla's (NASDAQ: TSLA) lease-backed bonds have quickly been bought up by the company's enthusiasts and long-term investors, and the electric automaker was able to borrow its $700 million loan at a cheaper level than anticipated initially.
Earlier this week, Teslarati reported that Tesla would use leases of its Model S, Model 3, and Model X vehicles to back a $779.53 million bond. It marks the first time that Tesla was using a debt deal in 2020, but the company had used them once in 2019 and twice in 2018.
Tesla's newest vehicle, the Model Y, was not included in the bond offering because the automaker has only been leasing the electric crossover for a few weeks.
Leases on the Model S sedan and the Model X SUV make up half of the collateral for the bond, while the other half comes from the Model 3, which is the company's most popular vehicle.
The Model 3 was the highest-selling EV in the world in June, selling more than three times the amount of units of the second-place car, the Renault Zoe.
Tesla offered eight different classes of bonds, a majority of which carried mostly top AAA ratings from Moody's Investors Service. The bonds would mature for investors in 2.7 years or less.
Tesla encountered high demand during the week because of the bond deal that was tied to the leasing program for its electric cars. Investors ate up the offered bonds, and Tesla was able to borrow more than $700 million at a cheaper rate.
According to MarketWatch, its most significant chunk of bonds was valued at $215 million and would mature in 1.1 years. This portion of the bonds "cleared the market at a spread of 35 basis points above a risk-free benchmark to yield .56%."
Tesla's Ba2-rated bonds that mature in 2.71 years cleared at a yield of 4.6%, an investor who tracked the offering said. Ba2 bonds are significantly more risky than other types of bonds because they are judged to have speculative elements and are usually subjected to higher credit risk.
This marks the first time Tesla has used the technique during the coronavirus pandemic. The electric automaker headed by CEO Elon Musk has been broadly recognized as one of the few companies to gain economic momentum at a time where consumers are not spending money. Unemployment rates continue to soar in the United States, but Tesla is hiring, ramping production of its vehicles, and has managed to increase its stock price significantly since the beginning of the year.
The company is also opening a new U.S. production plant in Austin, Texas.
Tesla delivered 90,650 vehicles during the second quarter of 2020.
Source: teslarati
News Model 3, Model s, Model x, tesla, TSLA
» Tesla Model Y customer deliveries in China to begin this month
» Tesla Solar Roof 12kW installation completed in one day
» Tesla's gains new Street-high price target from Bank of America
» Tesla can help solve Human Trafficking: A survivor explains how
About Victor Colstrup
I have always been interested in technology and have especially followed Elon Musk and his exciting journey in creating a better world. I will soon also add articles in my other interest and that is AI (Artificial Intellegence) which I hope everyone will like as much as I do. TeslifyNews will be the source for future technology and how it will impact society. See you!
View all posts by Victor Colstrup →
Twitter: Teslifynews
Facebook: Teslifynews
Linkedin: TeslifyNews
If you love Tesla and everything else about Elon Musk, then you will love Teslifynews. Teslifynews will daily publish articles from all over the world about Elon Musk's company and adventure.