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:

Pin It

Comments

Recommended

The German automaker Volkswagen is now racing against time to come up with electric vehicles that will be able to pass Europe and China's stringent emission standard. The car company...
by - March 22, 2017
In the last few years, the advent of compact sedans and crossovers has become quite overwhelming. Even two of the major manufacturers that “started it all” have to admit that...
by - March 22, 2017
By 2020, Audi will be throwing out not just one but three fully-electric vehicles. One of which will be pitted against the BMW i8. This new information was revealed by...
by - March 22, 2017
Tesla confirms that they will be discontinuing the fairly new Model S 60 and 60D sedans as soon as next month. Why, you ask? The company wants to make enough...
by - March 22, 2017
Have you ever wondered how much luxury car companies profit from every vehicle they sell? And which companies profit more? Well, in 2016, Porsche sold over 238,000 vehicles. That is...
by - March 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