13 Aug 2017 - 0:41
Bond investors give Tesla a $1.8bn endorsement
New York: Bond investors gave a $1.8bn boost to Tesla Inc’s balance sheet by snapping up the electric car maker’s first foray into the US junk bond market, where yield-hungry investors have raced to lock in relatively higher returns.
Those robust returns, however, have shrunk as a strong reservoir of cash ready to deploy in the riskiest areas of the high-yield fixed income market has pushed them to near their lowest levels in three years. That has given junk-rated issuers such as Elon Musk’s U.S. car company the opportunity to raise cash cheaply.
Tesla sold $1.8bn of eight-year unsecured bonds at a yield of 5.30 percent, the Palo Alto, California-based company said in a filing with the Securities and Exchange Commission.
The bond was sold at par, according to a source familiar with the transaction, who requested anonymity because the detail was not publicly disclosed.
Tesla initially wanted to sell $1.5bn worth of debt but enlarged the offering because of overwhelming demand, according to IFR, a Thomson Reuters unit. The yield was slightly higher than the 5.25 percent cited at the initial launch. Tesla aims to boost production to 500,000 cars next year, about six times its 2016 output.