Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Unsolicited s&p bond rating

This site may earn commission on affiliate links.
Chickenlittle

Chickenlittle

Banned
Sep 10, 2013
2,781
5,169
Virginia
#1
Not very experienced in bond market but I thought bonds were usually rated prior to sale and then upgraded or downgraded depending on circumstances. Will it affect stock price? Unlikely in my opinion. It may affect ability to do more offerings in the future. I believe they got such a good interest rate on the likelihood of conversion not their current ability to repay loan
 
#3
Chickenlittle said:
Not very experienced in bond market but I thought bonds were usually rated prior to sale and then upgraded or downgraded depending on circumstances. Will it affect stock price? Unlikely in my opinion. It may affect ability to do more offerings in the future. I believe they got such a good interest rate on the likelihood of conversion not their current ability to repay loan
Click to expand...

I'd suspect that the two are closely tied. If Tesla was unable to repay then the conversion probably wouldn't be worth as much. The conversion is typically more of a kicker / additional upside for the bond holder.

The interesting thing is that S&P said that they did this at the request of investors, not Tesla. That is atypical, and probably means that institutions are trading / want to trade the bonds. I take that as a good sign of developing liquidity for the company.

In terms of the B- rating, that is probably on par for newish companies w/o profitability but with good cash flow. Maybe someone else here can provide more perspective
 
#4
30seconds said:
I'd suspect that the two are closely tied. If Tesla was unable to repay then the conversion probably wouldn't be worth as much. The conversion is typically more of a kicker / additional upside for the bond holder.

The interesting thing is that S&P said that they did this at the request of investors, not Tesla. That is atypical, and probably means that institutions are trading / want to trade the bonds. I take that as a good sign of developing liquidity for the company.

In terms of the B- rating, that is probably on par for newish companies w/o profitability but with good cash flow. Maybe someone else here can provide more perspective
Click to expand...
Thanks
 
#5
30seconds said:
I'd suspect that the two are closely tied. If Tesla was unable to repay then the conversion probably wouldn't be worth as much. The conversion is typically more of a kicker / additional upside for the bond holder.

The interesting thing is that S&P said that they did this at the request of investors, not Tesla. That is atypical, and probably means that institutions are trading / want to trade the bonds. I take that as a good sign of developing liquidity for the company.

In terms of the B- rating, that is probably on par for newish companies w/o profitability but with good cash flow. Maybe someone else here can provide more perspective
Click to expand...

I'm not convertible bond expert (they can be very complex instruments) but my feeling it that the conversion is the main event for these bonds...the interest payments are worse than what T-Bills yield.
 
#6
From S&P:

“We believe there is considerable uncertainty in Tesla’s long-term prospects,” S&P analysts Nishit Madlani, Dan Picciotto and Joseph Lin wrote in the report. Compared with larger, more established automakers, the company is less likely “to successfully adapt to competitive and technological displacement risks over the medium to long term,” they said.
Click to expand...

lol.
 
#11
EarlyAdopter said:
From S&P:

“We believe there is considerable uncertainty in Tesla’s long-term prospects,” S&P analysts Nishit Madlani, Dan Picciotto and Joseph Lin wrote in the report. Compared with larger, more established automakers, the company is less likely “to successfully adapt to competitive and technological displacement risks over the medium to long term,” they said.

lol.
Click to expand...


This is a truly amazing quote. Not a clue as to what the future beholds.
 
#13
S&P? Who are they? Oh yeah, they seemed to do a really good job back in 2007/08 time frame. Since then I've always, make that, ALWAYS, thought of them as Poor Excuse for a Standard. They're a private company with a vested interest and it ain't about honest factual reputable work, IMO. Of course, one could look at the article and think that the analysts who wrote it are merely looking at the world AS IT USED TO BE, not the world that Tesla is quickly inventing. But if they're doing that, why the h*** are they in the business of predicting the future?

Ok, venting over. Until next time. See signature if you take exception.
 
#14
It amazings me the ineptitude and false justification at S&P
typically large companies are displaced by new entrants into the market. Someone needs to bone up on the Kodak case study, the GM case study, typewriter manufacturers, or even the buggy whip manufacturers.

There is a phenomena called company momentum. Essentially large companies take longer to "move" or switch directions vs smaller companies. Someone at S&P has to take some business classes

Not only that, they ratings have been a joke ever since the 2007 ish- really who gives a subprime mortgage back security a AAA rating?

Really being one of the culprits of the economic collapse- and you want people to trust you?
 
#15
It was always fun to hear of someone on the opposing team giving bulletin board material to Michael Jordan before a playoff series....or to Tiger in his prime.

You don't pull on Superman's Cape,
you don't spit into the wind,
you don't pull on the mask of the ol' lone ranger and you don't

Give Tesla an unsolicited and insulting bond rating from a discredited financial institution right before a series of potentially very public speaking engagements by ELON FREAKING MUSK!

Don't they remember the short-baiting, Russian oligarch mocking, ULA, US Air Force, New Jersey Governor, revolving door defense contractor (I'm missing about 20) Twitter Terror that is Elon Musk.

Well played S&P.....well played.
 
#16
Bgarret said:
It was always fun to hear of someone on the opposing team giving bulletin board material to Michael Jordan before a playoff series....or to Tiger in his prime.

You don't pull on Superman's Cape,
you don't spit into the wind,
you don't pull on the mask of the ol' lone ranger and you don't

Give Tesla an unsolicited and insulting bond rating from a discredited financial institution right before a series of potentially very public speaking engagements by ELON FREAKING MUSK!

Don't they remember the short-baiting, Russian oligarch mocking, ULA, US Air Force, New Jersey Governor, revolving door defense contractor (I'm missing about 20) Twitter Terror that is Elon Musk.

Well played S&P.....well played.
Click to expand...

Well said Bgarret......Well said.
 
#17
EarlyAdopter said:
From S&P:


“We believe there is considerable uncertainty in Tesla’s long-term prospects,” S&P analysts Nishit Madlani, Dan Picciotto and Joseph Lin wrote in the report. Compared with larger, more established automakers, the company is less likely “to successfully adapt to competitive and technological displacement risks over the medium to long term,” they said.

lol.
Click to expand...


The ignorance is trully a bliss.

Quote #2: "Tesla's narrow product focus, concentrated production footprint, small scale relative to its larger automotive peers, limited visibility on the long-term demand for its products, and limited track record in handling execution risks."

???
They are analyzing Company's debt that was largely incurred in order to build GF with 30% (15GWh out of total 50GWh) of it's output aimed at stationary (grid and off-grid) energy storage... Narrow product focus??

The fun does not stop here, in the same article a journalist from CNN shows his brilliance with the following statement:

"CEO Elon Musk has announced plans for the company to raise $1.6 billion to build a huge new lithium battery plant, known as the Gigafactory"

Apparently he missed the fact that the raise already happened, that is was for more than $2.0B, and that this capital raise is precisely the reason for the S&P rating in the first place!

http://money.cnn.com/2014/05/28/investing/tesla-junk-bond-rating/
 
#20
Internet is great equalizer, we do not need S&P to tell us anything

S&P most likely feel threatened that investors can discover that they can do just fine without S&P ratings. Information is available to anyone interested. Investors can process the information and come up with judgement that is as valid as anyone else's including S&P.

S&P:scared: need to push their way back into relevance by issuing unsolicited ratings.
 
You must log in or register to reply here.

Similar threads

tps5352
Possible Opportunity to Participate in a Multi-Cancer Early Detection Test Study
Replies
2
Views
752
Off Topic
tps5352
tps5352
voip-ninja
General thread about Tesla resale in Q4 2022 and tips to help sellers
Replies
4
Views
1K
Off Topic
Ritz
R
tlr1000
My rear screen experience - Tlyard
Replies
7
Views
7K
Model 3: User Interface
tlr1000
tlr1000
P
Poor Experience buying a Tesla Model 3
Replies
20
Views
9K
Model 3: Ordering, Production, Delivery
ValenciaUSC
V
MountainPass
Vendor Tesla Model 3 Tires – Choosing the Right Tires for Your Needs
Replies
52
Views
33K
Model 3
canasion35
canasion35
Top
Back
Blog
New
Forum list
Marketplace
Menu