TESLA sold US$499 million of bonds backed by loans offered to customers buying solar equipment.
Deutsche Bank began marketing the five-tranche deal on Monday (Oct 28) and the process wrapped up on Friday. Fitch Ratings gave all the tranches investment-grade designations, noting the high credit scores of the customers receiving the financing.
There was substantial demand for the debt, with all the tranches seeing more orders than supply available, according to sources familiar with the matter. The deal has a 4.83 per cent coupon on its top tranche.
A representative for Tesla did not respond to requests for comment. A Deutsche Bank did not provide comment.
This is not Tesla’s first foray into solar asset-backed securities. In 2016, the company acquired SolarCity which led bond sales in that arena. Since 2018, however, the collateral Tesla offers on asset-backed debt has been largely limited to leases on its vehicles. Then last year, it debuted its first bond supported by prime auto loans.
So far in 2024, the company issued US$2 billion of asset-backed debt, compared to nearly US$4 billion last year. Its latest issuance comes at a time companies of all stripes are diving into debt markets. Sales in the broader universe of asset-backed securities hit US$321 billion, according to data compiled by Bloomberg, hitting their highest level since the financial crisis.
In particular, debt backed by solar-related collateral jumped to US$5 billion so far in 2024, according to data compiled by Bloomberg News. That’s compared to US$3.7 billion around the same time last year.
At the same time, delinquencies on solar loans have climbed to the highest this year since the early pandemic, according to data from Kroll Bond Rating Agency. The US solar industry has also been pressured by high interest rates, which have made solar equipment less affordable to homeowners. That has pushed solar firms such as Lumio and SunPower to bankruptcy in recent months. BLOOMBERG