Tesla Stock Slumps After "Terrible Bond" New Issue Tanks

Tyler Durden's picture

Tesla stock prices has almost erased all of its post-earnings gains as the company's recently issued $1.8 billion junk bond is tumbling...

TSLA stocks is giving back its post-record-cash-burn gains...


As the newly issued junk bonds are suddenly coming face to face with this ugliness...


As MarketWatch reports, the 5.3% notes due 2025 are now trading as high as 5.75% yield (with the risk spread blowing out from 330 to around 370bps)

AllianceBernstein’s Distenfeld said investors are still starving for income in a low-interest rate, low-yielding world, and said it is important to be patient -- and disciplined -- in this market.

“Tesla was an aggressive deal for a company that is not expected to be cash-flow positive for years,” said Gershon Distenfeld, head of credit at asset manager AllianceBernstein.


 “At just over 5%, it is not a great risk return,” he said.


“There are companies coming to market that shouldn’t be issuing at all, so you have to watch out,” he said.


“The same is happening in the bank loan market, people are afraid of rising rates and enamored of floating-rate debt, so underwriting quality is changing.”

This seemed to sum things up perfectly though...

“Anyone who looks at a lot of high-yield bonds would expect more robust protection against future debt,” Valerie Potenza, head of high-yield research at Xtract Research, a sister company of Debtwire, told MarketWatch ahead of the sale.


“We think it’s a terrible bond, but people seem blinded by the Tesla story.”


Blinded indeed...

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SloMoe's picture

Tesla's latest innovation: Underwater Bonds...

Moe Hamhead's picture

No more taxpayer support for Tesla.  Please!

mtl4's picture

Tesla's biggest innovations are in corporate welfare and financial tomfoolery.

jcaz's picture

LOL- there were some big money guys touting this deal pretty hard-  two weeks later, they're finally waking up.  Unsecured, only a 5% coupon, and the money raised is spitting into the wind for Tesla-  real Par is prolly around 50,  good lucking holding this piece of shit on your books for the next 15 years, whoops.....

Freddie's picture

5%?  ha ha.  Sadly we have the Rothschild Fed and ZIRP to totally misallocate capital.   Any Tesla junk bonds should be yielding 13% in a normal world.

FringeImaginigs's picture

LOL That's funny. You really think that the big money guys touting this deal are now just waking up.  The touts are touts because they knew the deal sucked. Thats why they were touting it. That's what it means to be a tout. The touts are as touts always were.  Meanwhilte, the suckers are those that bought the deal. Maybe a few of them are just starting to get the message, maybe not.  But they will all get the message long before the bonds mature. 

GunnerySgtHartman's picture

SloMoe, I originally read your post as 'underwear bonds.'  Sorry about that.  But it might be fitting when TSLA winds up taking a dump in bankruptcy court.

Freddie's picture

Maybe Tesla and Elon can create driverless US Navy ships. They cannot be any worse than the current ghey Navvy sailors. 

The USS Harvey Milk.

Deplorable's picture

The curse of John McCaine...

The Jaguar's picture

Bwaaaahahaha, Tesla socialism fails lol.

taketheredpill's picture



I saw the spread and felt my retinas burning....

Freddie's picture

You could drive a USNavy destroyer through that wide spread....well almost; 

Ben A Drill's picture

Let's face it. Electric cars are no substitute for gas powered engines. Never will be. Anything electric or battery powered is dirty energy.

hound dog vigilante's picture


electric can be clean, but if batteries are involved then it's absolutely dirty... battery tech is the weak/dirty constant in the renewable energy equation.


every serious gov't & military in the world has spent big budget & brains on the battery tech plateau and all have come back w/ nothing... add Musk to that list.


TSLA is a glorified golf cart. 

south40_dreams's picture

The manufacturing process for those batteries far out pollutes ANYTHING an internal combustion engine automobile could ever hope to produce.

Ben A Drill's picture

You can't have a electric car without a battery. Doesn't exsist so my post stands that electric cars are dirty. Not to mention they overheat, can't handle freezing temperatures or extreme heat and are reliant on charging stations that are few and far between.

Clowns on Acid's picture

TSLA should get a huge BId ...after the Eclipse. 

makinbacon's picture

If you will please divert your attention from my stock price to the impending human annihilation by robot.... 

Blazing in BC's picture

Who are the people blinded by tesla?

Catahoula's picture

Pull the taxpayer tit from scam artist!

shizzledizzle's picture

Shoot the moon and sell them Argentina style. 100yr, check's in the mail!

zzzz88's picture

very likely, this animal will bankrupt in next recession cycle, 

wait and see!

abgary1's picture

Tesla only makes sense if you believe in the false premise of global warming and sustainability of government subsidizes.

In other words, this is a perfect investment for the leftwing progressive idiots who have more money than brains.

ReturnOfDaMac's picture

Can't afford one, huh?  I know how ya feel ...

83_vf_1100_c's picture

I was listening to a car talk guy on AM a few days ago. He was taking about the inability of Tesla to supply spare parts for the model S now. He stated when the commoners model 3 hits the market in much larger #s and the spare parts system locks up they are going to have serious public relations probs. The rich have 6 cars in the garage and their S being down for parts 6 - 12 months makes for nice party talk. Joe 6pack's 3 being down means he can't get to work. Then there is the 500k cars they are supposed to produce in 2018 model year. Not happening. Best estimates are they might kivk out 100k this year and 400k folks who reserved one may be waiting 3 yrs for it. This assumes Tesla is in biz 3 yrs from now.

  The model 3 is aptly named. Buy it today and drive it 3 yrs from now. Tesla ain't gonna make it. You want an electric car it will be Jap or Chinese.  My carbed 62 v8 Fairlane looks better everyday.

Dickweed Wang's picture

My carbed 62 v8 Fairlane looks better everyday.


If the big EMP event happens that takes out electronics all over the country (which BTW is impossible without using tens or hundreds of nukes) then having a car made before the early '70s will be the only way to go.

Milton Keynes's picture

for a day or two, maybe a week.


The Refineries need lots of grid power, the

transporters need GPS.


Nobody is running zip without Internet, PCs, smart tablets...


You have an EMP and we are back to 1920's...

With little margin.


You want to run a refinery, where do the workers sleep after hours?

Who feeds them? Where are their families?  What about doctors?


All that secondary stuff is grid connected.


Sure, NeckBeardo may have his redoubt with 500 gallons of 87 octant.


Okay...  Then what.

not dead yet's picture

Supposedly until at least November any 3 built will have the longer range battery raising the price to $44,000. Another site claimed those cars will also be sold with the upgraded interior, the standard is really cheap, for another 5 grand bringing the total to $49,000. Looks like those wanting a 35 grand Model 3 will be pushed to the back of the line even if they got in early. More cancellations on the way. I would like to see proof of Musk's claim that Tesla is getting 1,800 orders a day for the 3.

Greenspazm's picture

The name is Bonds. James Bonds.

Ban KKiller's picture

Tesla, a proud name ruined by ponzi...

PontifexMaximus's picture

all gaps have to be filled

IronForge's picture

Just wait for the next three Earning Reports.