Tesla is preparing to raise $783 million through a debt sale backed by its automotive leases, according to a report from Bloomberg News on Thursday.
The electric vehicle manufacturer is tapping into the growing asset-backed securities (ABS) market as interest in such deals has surged within the auto industry. The transaction is being managed by Societe Generale and is expected to be priced next week.
This would mark Tesla’s second ABS deal of the year, following a $750 million debt offering in March that carried a 5.53% coupon on its top tranche. According to the Bloomberg report, Tesla is currently premarketing the debt sale, which will primarily be backed by prime borrowers.
Tesla’s move aligns with a broader trend in the automotive industry as automakers increasingly turn to asset-backed securities to raise capital.
Ford Motor recently completed a $1.7 billion ABS deal, adding to the growing number of transactions in this space. As of the second quarter of 2024, Tesla had more than $4.2 billion in ABS notes.
Despite tapping into the debt markets, Tesla is holding a solid cash reserve of $30 billion, including cash equivalents and short-term investments, as of its last reported quarter. The new debt sale is expected to further bolster Tesla’s liquidity and support its expanding business operations.
