Tesla Inc. agreed on Aug. 11 to sell $1.8 billion worth of senior notes, due in 2025, with a coupon rate of 5.30%. The company had earlier proposed selling $1.5 billion of senior notes, so the actual sale represents a 20% upsize.
The proceeds from this offering will be used to strengthen its balance sheet during a period of rapid scaling with the launch of Model 3 electric car and for general corporate purposes, Tesla said in a news release.
An Aug. 12 report by Marketwatch cited analysts who said the notes carried a high level of risk. "We think it's a terrible bond, but people seem blinded by the Tesla story," said Valerie Potenza, head of high-yield research at Xtract Research.
The notes are not registered under the Securities Act of 1933 and may not be sold in the U.S. The securities will be offered to qualified institutional buyers and to non-U.S. persons outside the states as allowed under the Securities Act.
The offer is expected to close on Aug. 18.