

S&P Rates Tesla Debt as 'Junk' – Update - 001sky
http://online.wsj.com/article/BT-CO-20140527-712847.html
see also: S&amp;P Assigns &#x27;B-&#x27; Rating to Tesla (TSLA); Notes &#x27;Vulnerable&#x27; Business Risk Profile<p>http:&#x2F;&#x2F;www.streetinsider.com&#x2F;Credit+Ratings&#x2F;S%26P+Assigns+B-+Rating+to+Tesla+%28TSLA%29%3B+Notes+Vulnerable+Business+Risk+Profile&#x2F;9525763.html
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001sky
"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-...](http://www.streetinsider.com/Credit+Ratings/S%26P+Assigns+B-+Rating+to+Tesla+%28TSLA%29%3B+Notes+Vulnerable+Business+Risk+Profile/9525763.html)

 _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.

