After the announcement, Standard & Poor’s gave the bonds a B- rating, putting them in the high-risk junk bond category. Moody’s assigned a similar B3 rating to the bonds.
“We could lower our ratings on Tesla if execution issues related to the Model 3 launch later this year or the ongoing expansion of its Models S and X production lead to significant cost overruns,” S&P said in a statement.
According to Bank of America Merrill Lynch, the standard interest rate for a bond like Tesla’s would be 5.5%, but factors like the lack of a long credit history and the “green” nature of the company could affect the rate.
Tesla is going into “production hell” as it begins to produce its first mass-market vehicle, the Model 3, according to CEO Elon Musk.
Shares of Tesla are up 65.59% this year.
- Markets Insider