(Repeats to widen distribution)

By Kate Duguid

NEW YORK, May 2 (Reuters) – Tesla Inc should find no shortage of demand for the $1.35 billion convertible bond the electric carmaker is selling even though the terms it is offering look inferior on paper to a similar deal two years ago, bond investors said Thursday.

And Tesla’s volatile and broadly underperforming stock is one reason why, they said.

Convertible securities feature the income and protections of a low-yielding bond but offer the potential to profit far more from a jump in the stock price that triggers repayment in shares rather than cash.

In the new deal, being sold alongside $650 million in new shares, Tesla is looking to offer an interest rate below the coupon on