From Bloomberg, Friday Aug. 18:
Tesla Inc.
bonds slid a week after they were sold, as excitement over Elon Musk’s
ambitious rollout of the Model 3 was tempered amid geopolitical tensions
and second thoughts among investors about how little they’re getting
paid.
The company’s $1.8 billion of 5.3 percent notes due 2025
slipped below par almost immediately, trading as low as 97.4 cents on
the dollar on Friday, according to data compiled by Bloomberg. The
eight-year securities had priced a week ago at a record-low yield for a
bond of its rating and maturity -- a touch higher than initial talk of
5.25 percent -- and Tesla had added $300 million to the offering to meet demand.
Musk had personally pitched
investors for Tesla’s debut offering in the junk-bond market,
ultimately drawing orders for about double the initial offering. The
demand allowed the company to boost the size of the sale even as
investors and analysts highlighted Tesla’s lack of profit and record
cash burn.
“The way that it’s traded is showing that portions of the
market just weren’t long-term holders at that price,” Gershon
Distenfeld, director of credit at AllianceBernstein LP, said in an
interview. “I own a Tesla, I love the product. But I think investors
recognize that 5.3 percent was probably not the right price.”...MORE
