{"id":61155,"date":"2023-09-14T23:56:55","date_gmt":"2023-09-15T03:56:55","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/tesla-readies-record-sized-pool-of-ev-leases-for-bond-deal-a-sign-of-resilience-in-luxury\/"},"modified":"2023-09-14T23:56:58","modified_gmt":"2023-09-15T03:56:58","slug":"tesla-readies-record-sized-pool-of-ev-leases-for-bond-deal-a-sign-of-resilience-in-luxury","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=61155","title":{"rendered":"Tesla readies record-sized pool of EV leases for bond deal, a sign of resilience in luxury"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002507126\" role=\"document\">\n<p>Tesla drivers don\u2019t appear to be scared off by the Federal Reserve\u2019s rate hikes.<\/p>\n<p>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. <\/p>\n<div class=\"paywall\">\n<p>The financing represents the biggest batch of leases from Tesla Inc.<br \/>\n        TSLA,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/203558040\/lastsale\" class=\"positive\">+1.75%<\/bg-quote><br \/>\n       to be turned into bonds since it began originating them in 2014, according to a Fitch presale report.<\/p>\n<p>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\u2019t be marketed for sale, according to preliminary marketing materials viewed by MarketWatch. <\/p>\n<p>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 rose 1.8% Thursday and were up a stunning 124.1% on the year so far, according to FactSet.  <\/p>\n<p>A similar Tesla bond deal in July paid investors coupons of 5.6% to 6.4%, while one from 2021 paid only 0.16% to 1% when Fed rates were nearly zero, according to data from Finsight. Corporate borrowing costs have gone up with rates.<\/p>\n<p>Should demand for the new bonds run high, bankers can increase the size of its classes, an investor said. That would provide Tesla with a bigger financing. The transaction isn\u2019t expected to price until next week. Tesla didn\u2019t immediately respond to a request for comment.<\/p>\n<p>The size of the transaction echoes recent data showing U.S. consumers have remained fairly resilient, despite aggressive Federal Reserve interest-rates hikes since last year to tamp down inflation. But costlier debt appears to be hitting subprime borrowers harder.<\/p>\n<p>Jen Ripper, an investment specialist at Penn Mutual Asset Management who invests in securitized products, said she prefers exposure to shorter-duration bonds backed by prime borrowers, given that student debt repayments resume soon and because households\u2019 leverage have increased from pandemic lows.<\/p>\n<p>\u201cAlong with rising debt balances, interest rates on consumer debt are also rising,\u201d Ripper said in a client note Thursday.  <\/p>\n<p>Leases in the new Tesla deal are backed by prime borrowers paying a weighted average interest rate of 5.06%, up from 4.9% for a Tesla deal from earlier this year, according to Fitch. <\/p>\n<p><strong>Related<\/strong>: Tesla may be the winner of Big Three-UAW labor talks<\/p>\n<p>Stocks closed higher Thursday, with the Dow<br \/>\n        DJIA<br \/>\n       booking a more than 300 point gain, ending up 1%, while the S&amp;P 500 index<br \/>\n        SPX<br \/>\n       rose 0.8% and the Nasdaq Composite Index<br \/>\n        COMP<br \/>\n       advanced 0.8%, according to FactSet.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/tesla-readies-record-sized-pool-of-ev-leases-for-bond-deal-a-sign-of-resilience-in-luxury-77d06972?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tesla drivers don\u2019t appear to be scared off by the Federal Reserve\u2019s 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. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":61156,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-61155","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tesla readies record-sized pool of EV leases for bond deal, a sign of resilience in luxury | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Tesla drivers don\u2019t appear to be scared off by the Federal Reserve\u2019s rate hikes. 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