Tesla announced on Monday that the electric car company wants to raise another $1.5 billion to fund increased production capacity for the Tesla Model 3. It appears that the company will dip its toes into the bond market for its next source of cash and is tapping bond experts at Goldman, RBC, Deutsche Bank, Morgan Stanley, and Barclays to round up interest in the offering.
The credit rating agencies were quick to announce their view on this offering by pegging the bond issue in the ‘B’ range, which is all-too-close to junk credit. Standard & Poor’s gave Tesla’s bonds a B-, while Moody’s rated it at B3. Both companies stressed that there is a significant risk to these bonds, but both also said that because of the company’s current cash position, physical assets, and brand equity they felt that there was enough stability to keep it in the ‘B’ range. The credit agencies also noted that if the company were to default all of its current assets would be of high value to other automotive manufacturers.
This news should make naysayers take note, as short selling companies have made bets on the stock market that the company will fail in the near future. Instead, it looks like even the credit rating agencies are willing to give Tesla enough leeway to try and bring electric cars to the mass market. Just another day at the coolest company in the world, I guess.