Market Extra: Tesla readies record-sized pool of EV leases for bond deal, a sign of resilience in luxury

by | Sep 16, 2023 | Stock Market

Tesla drivers don’t appear to be scared off by the Federal Reserve’s rate hikes. The EV-maker began sounding out potential investors on Thursday for a new, $1.8 billion securitization of its electric-vehicle leases, its largest yet, according to preliminary marketing materials and Fitch Ratings.

The financing represents the biggest batch of leases from Tesla Inc.
to be turned into bonds since it began originating them in 2014, according to a Fitch presale report. The plan is for bankers to drum up interest in about $1 billion of notes split into five classes of bonds, with ratings of Triple A to Double A, while lower-rated tranches won’t be marketed for sale, according to preliminary marketing materials viewed by MarketWatch. Proceeds can be used by Tesla to make more leases, providing an alternative source of funding for the company beyond the corporate bond market. Tesla shares were 0.8% lower Friday, but up a stunning 123% on the year so far, according to FactSet. Early Friday, nearly 13,000 U.S. auto workers went on strike after labor talks between the United Auto Workers and the Big Three automobile makers failed in reaching an agreement. Tesla so far has fended off unionization efforts at its U.S. factories, writes MarketWatch’s Claudia Assis, which has resulted in about 38% lower wages at Tesla than workers at the Big Three. Related:Will UAW strike provide an opportunity for Tesla — and push up car prices? Stocks were lower Friday after , with the Dow

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