Tesla is considering selling $783 million in bonds. The papers are said to be secured by car leasing contracts from premium borrowers, reports Bloomberg
. The electric car maker’s move is one example of many in which automakers sell debt securities backed by claims. Companies can obtain additional liquid funds with so-called asset-backed securities (ABS).
The deal, handled by Société Générale (SocGen), would be Tesla’s second transaction this year and is expected to close next week. The $750 million deal in March had a coupon rate of 5.53 percent on the top tranche. SocGen and the carmaker declined to comment on the report.
Tesla, like other major US car manufacturers, uses the ABS market regularly – although not as often as its competitors. The manufacturer’s securitizations reached almost four billion dollars last year, the highest value to date. The car manufacturer ford had just announced a corresponding deal for $1.7 billion yesterday.
As in other areas of the U.S. debt markets, the number of ABS issuances has surged this year as interest rates began to fall and the difference between buying and selling prices narrowed. ABS emissions are approaching the 2021 record.