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S&P Rates Tesla Debt as 'Junk' – Update

• 001sky 12y ago
  "The rating, four levels below investment grade, is unsolicited because Palo Alto, Calif.-based Tesla doesn't have a rating agreement with the S&P to rate its debt, but S&P said there was sufficient investor interest to go forward with the rating. According to S&P, Tesla has liability for $2.9 billion in convertible bonds." This clears up the muddled articulation in the earlier Bloomber Article. (1) Below investment grade is typical for high-growth companies; (2) TSLA stock is up 40% in the past year (3) S&P issued a 'sell' TSLA equity rating in 10/2013 (read that how you will) Details on the notes are available (see also): S&P Assigns 'B-' Rating to Tesla (TSLA); Notes 'Vulnerable' Business Risk Profile http://www.streetinsider.com/Credit+Ratings/S%26P+Assigns+B-+Rating+to+Tesla+%28TSLA%29%3B+Notes+Vulnerable+Business+Risk+Profile/9525763.html http://www.streetinsider.com/Credit+Ratings/S%26P+Assigns+B-... We also assigned our unsolicited 'B-' issue-level and '4' unsolicited recovery ratings to the company's $920 million 0.25% unsecured convertible notes due 2019, $1.38 billion 1.25% unsecured convertible notes due 2021, and $660 million unsecured convertible due 2018. The '4' recovery rating indicates our expectation for average recovery (30%-50%) for the noteholders in the event of a payment default. Note that these are convertible in TSLA stock--they are not plain vanilla debt instruments. Again, this is consistent with high-growth/high volatility growth company profile of TSLA.