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US electric car firm Tesla was roadshowing a $1.5bn eight year debut bond offering this week. The company can do no wrong in many observers' eyes, although stripped back documentation is likely to deter at least some investors from the deal.
The eight year non-call three senior unsecured dollar notes mark Tesla's debut in the bond markets, after years of privately conducted equity fundraising rounds.
Goldman Sachs is leading the deal, which has initial price talk at 5.25%. Perhaps more importantly, however, the bond affords little protection to potential creditors.
Research house CreditSights noted that the bond documentation has no limit to the use of Tesla's Gigafactory 1 facility in Nevada, USA -- which it describes as Tesla's most valuable asset -- as collateral for the company's debt.
Bondholders therefore face the prospect of the company raising further senior, secured debt against the plant, effectively subordinating their claim to the asset CEO Elon Musk recently called the "alien mothership".
"The...