Tesla sold $546 million of auto lease-backed bonds Thursday, giving Elon Musk a more conventional source of funds after he sold out of a batch of 20,000 flamethrowers to help pay for his proposed transportation tunnels.
The sought-after debt deal allowed Tesla to slash the risk premiums it would pay on the notes. They were sold to yield between 2.3 percent and 5 percent. Investors had at the initial offered prices put in orders for as much as 14 times what the electric-car maker intends to sell on some slices of an asset-backed security, according to people familiar with the matter.
Tesla marketed bonds tied to leases of its Model X and Model S vehicles. It’s the company’s inaugural auto ABS deal after charming buyers in the equity, convertible-bond and junk-debt markets. Tesla initially dangled juicy yields to lure investors, as much as 2.9 percentage points over benchmarks on lower-rated portions of the debt. It was later able to cut that margin to 2.65 percentage points, thanks in part to its reputation as a well-known innovator with a charismatic chief and a hotly anticipated product.
“It’s got the Elon Musk magic to it,” said John Kerschner, head of securitized products at Janus Henderson Investors, which manages $360.5 billion. “It just makes for an easier sale.”
Tesla didn’t respond to requests for comment.
(c) 2018, Bloomberg · Claire Boston