Tesla, the electric car manufacturer, recently sold off $837 million worth of bonds that are backed by car leases. The company is doing this in response to a recent increase in investor confidence and to gain support for their quickly growing leasing business.
Tesla’s TSLA, -2.94% decision to sell the auto-lease bonds comes amid a spate of volatility in debt markets and during a year-end period when many investors lose interest in buying new securities.
Yet investors said times are relatively good for the electric-car maker, which recently posted a record quarterly profit despite a year marked by production delays and high-profile missteps by chief executive Elon Musk.
The bonds, to a large extent, are more a bet on Tesla’s well-heeled customers than the company itself. The bonds are backed by car-lease payments from customers with very high credit ratings along with expected proceeds from the sale of those cars when the leases expire. As is generally the case with auto-lease bonds, they’re being issued by a special entity aimed at protecting investors in the event of a bankruptcy by the manufacturer.
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