S&P assigned B- corporate credit rating to Tesla Motors

Article by Christian A., on May 29, 2014

Standard & Poor's has given Tesla Motors Inc. below investment grade corporate debt rating of B- (junk), saying that the carmaker represents a vulnerable investment. S&P said the outlook for the rating is “stable.” The debt rating, which is way below investment grade, is unsolicited as the rating firm doesn't have a rating agreement with Tesla.

S&P, however, said there was enough investor interest to warrant with the rating. S&P said that Tesla has liability for $2.9 billion in convertible bonds. Companies usually are given junk-bond ratings if it has been determined that there is an increased risk of default.

This could be good news for investors, since junk bonds usually entail higher returns as junk-rated companies need to pay higher interest rates for access to investors’ capital.

S&P remarked that its "vulnerable" business risk profile assessment reflects the carmaker’s narrow product focus, concentrated production footprint and small scale relative to its rivals. The rating service said that Tesla has limited visibility on the long-term demand for its offers as well as limited track record in handling execution risks.

In case of a default, S&P estimated that investors likely would recover only 30 to 50 percent of their investment in Tesla.

For this year, the carmaker has so far issued $920 million of 0.25% unsecured convertible senior notes due 2019, and $1.38 billion of 1.25% unsecured convertible senior notes due 2021. The carmaker already issued $660 million unsecured convertible senior notes due 2018 in May 2013

If you liked the article, share on:

Comments

Recommended

We first heard of the fifth generation SEAT Ibiza earlier this year, and last week, the company finally revealed the all-new Ibiza at the international launch in Barcelona. The new...
by - May 22, 2017
The aftermath of the Takata airbag recall still largely resounds in the automotive industry, as big automotive companies like BMW, Mazda, Subaru and Toyota were extensively hit with what is...
by - May 22, 2017
Amid reports that major rival Volkswagen would cease producing 2016 and 2017 model year diesel cars following the wake of the "Dieselgate" scandal, it’s believed that Chevrolet sees its opportunity...
by - May 22, 2017
Honda recently whips out a new feature for the S660 Bruno Leather Edition. Any guesses? Well, it’s going to be an iPhone app that goes by the name Rev Beat....
by - May 22, 2017
And so it goes, Ford is not at all closing its doors to an all-electric F-150 pickup. The American manufacturer initially laid out its plans for an F-150 hybrid earlier...
by - May 22, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries