Where can I buy Tesla bonds?

daniel · Feb 272018

I've googled and googled and can't find anything. I own some solar bonds from Solar City and I am not worried by the nay-sayers. My bonds pay 5%are senior unsecurednon-negotiable 2025 maturity. I was looking to buy some morebut the Solar City web page continues to say there are no new bonds available.

So I heard that Tesla issued bonds last August (I'm off hiking all summerso missed the news). These have a 5.3% coupon2025 maturityare junk ratedand are apparently trading below parfor an even higher yield. But I have some room in my portfolio for some more high-risk bonds from a company whose mission I strongly support and am willing to take a chance on. (Most of my portfolio is very conservative.) (I also own some TSLAand I owned some SCTY before it got converted into TSLA. I have been a total Tesla fanboy since I got my Roadster 6 1/2 years agoand very soon now I'll be trading it off for a Model 3. I totally believe in this company and want to support it. Not enough to ignore common wisdom about high-risk investmentsbut as I saidI have room for a bit more.)

But I cannot find where to buy these bonds. Anybody know anything about this?

Lloyd · Feb 272018

You need to search the Tesla CUSIP number to find someone that has them on the secondary market. The current offerings are fully subscribed.

CUSIP 88160R101

Although you may not have to wait long. I read one article that indicated Tesla will need another offering by the 3rd quarter of this year or sooner if Model 3 ramp is not as expected.

daniel · Feb 272018

Thanks.

That's a different CUSIP than the one I found elsewhere for this bond issue. This page gives it as AO7577130. Either wayI couldn't find it. Trading at below par in the secondary market makes it even more attractivebut that suggests that it is trading somewhere. If anybody knows whereI'd like to know.

RiverCard · Feb 272018

daniel said:
I've googled and googled and can't find anything. I own some solar bonds from Solar City and I am not worried by the nay-sayers. My bonds pay 5%are senior unsecurednon-negotiable 2025 maturity. I was looking to buy some morebut the Solar City web page continues to say there are no new bonds available.

So I heard that Tesla issued bonds last August (I'm off hiking all summerso missed the news). These have a 5.3% coupon2025 maturityare junk ratedand are apparently trading below parfor an even higher yield. But I have some room in my portfolio for some more high-risk bonds from a company whose mission I strongly support and am willing to take a chance on. (Most of my portfolio is very conservative.) (I also own some TSLAand I owned some SCTY before it got converted into TSLA. I have been a total Tesla fanboy since I got my Roadster 6 1/2 years agoand very soon now I'll be trading it off for a Model 3. I totally believe in this company and want to support it. Not enough to ignore common wisdom about high-risk investmentsbut as I saidI have room for a bit more.)

But I cannot find where to buy these bonds. Anybody know anything about this?

CUSIP for the 2025 bonds is U8810LAA1. IIRCthey were issued under Section 144 A and Reg S

"Sec 144A is a restricted offering into the States is often combined with an unrestricted placement of securities offshore (i.e. outside of the US) under the provisions of Regulation S. In summarythe difference between Reg S and 144A is that 144A can only be held by Qualified Institutional Buyers (QIBs) in the US."

You can find CUSIPs at FINRA.org --go to the investor sectionmarket data centerand do a search for corporate bonds. CUSIPs for Tesla's converts are:
2018 88160RAA9
2019 88160RAB7
2021 88160RAC5
2018 88160RAD3

daniel · Feb 282018

RiverCard said:
CUSIP for the 2025 bonds is U8810LAA1. IIRCthey were issued under Section 144 A and Reg S ...

Thank you. I found them in my brokeragebut the message says:

"There are no markets currently available for CUSIP U8810LAA1."

I don't know if that just means my brokerage has no access to themor they are not available at all. I'd have thought that since there are places that say they are trading below parthat means they are trading somewhere. But if they were trading on any of the regular bond marketsI'd think my brokerage would have access to them. So I'm a bit confused.

2019 88160RAB7 and 2021 88160RAC5 are trading at a premium and have negative yield to maturity. I didn't bother looking at the ones that mature this year.

Clearly there's something I don't understandwhen the 2025 issue is trading well below par and paying 5.3% couponbut those others are trading well above par and have a negative yield. I've never bought convertibles and don't care to do anything complicated. As I mentioned beforeI just have the solar bonds because they supported the installation of solar power and pay a very good interestand I believe in the mission. I also believe in what Tesla is doingand trust them to stay afloatbut I don't support them enough to buy bonds with a negative yield.

... pause...

Okay. I just read up on convertible bonds over at Investopedia. Presumably the reason for the negative yield is that the conversion rate is favorable to the buyer. But this is not something I'm interested in.

McMuggets · Feb 282018

Why wouldn't you look at 2022 bonds? They are convertible 3 shares to $1000 par. You get 95% of the upside and far less danger than commons

daniel · Mar 12018

McMuggets said:
Why wouldn't you look at 2022 bonds? They are convertible 3 shares to $1000 par. You get 95% of the upside and far less danger than commons

Because I'm 69 years old and investing for incomenot growth. I want interestnot more shares of stock. AlsoI'm considering moving in a year or soand I'll be selling stock to pay for the new house. It makes no sense to be buying stock when I'm going to be selling stock. Plain bonds just sit there and pay interest.

RiverCard · Mar 22018

daniel said:
I don't know if that just means my brokerage has no access to themor they are not available at all. I'd have thought that since there are places that say they are trading below parthat means they are trading somewhere. But if they were trading on any of the regular bond marketsI'd think my brokerage would have access to them. So I'm a bit confused.

Those notes were not registered with the SEC. They can only be held by Qualified Institutional Buyers and certain foreign entities.

Tesla just transferred most of its outstanding S and X direct leases in the USA to the trustee of an Asset Backed Security. They have relatively short maturities and yields are in the ~2.3% to ~5% range. The B tranche is probably no more risky than the 2025 Notes. You can register at Moody's and review their Pre-Sale Analysis then see if your broker can find them.

frequencydip · Mar 272018

I started looking for mutual funds or ETFs that may have the tesla bonds since this is limited to Qualified Institutional Buyersso far I have only found this ishares with position in this Tesla 2025 5.3% Bond.

ETFs
iShares iBoxx $ High Yield Corporate Bond ETF
iShares iBoxx $ High Yield Corporate Bond ETF | HYG

daniel · Mar 272018

frequencydip said:
I started looking for mutual funds or ETFs that may have the tesla bonds since this is limited to Qualified Institutional Buyersso far I have only found this ishares with position in this Tesla 2025 5.3% Bond.

ETFs
iShares iBoxx $ High Yield Corporate Bond ETF
iShares iBoxx $ High Yield Corporate Bond ETF | HYG

Thanks for posting that. Their position in Tesla bonds is microscopicthough. I would imagine that there are other funds that hold Tesla bonds as wellbut with such a small positionthe Tesla bonds would not affect my decision to buy the fund.

I'll just consider myself fortunate that I got my solar bonds when I did.

I cannot imagine how you found this fund with Tesla so far down in the list of their holdings. Good catch!

B2FiNiTY · Mar 272018

If you're looking for incomelook into CEFs. Check out DNP and HYT for starters.

Dwdnjck · Mar 292018

I currently hold $200k worth of the tesla bondspurchased through my broker at Merrill Lynch.

daniel · Mar 292018

Dwdnjck said:
I currently hold $200k worth of the tesla bondspurchased through my broker at Merrill Lynch.

Thanks. My brokerage doesn't list themand I guess I don't want them badly enough to open a new brokerage account. But this looks like a good time to buy them. BondSupermarket says they're trading at about 90% of par and paying a 5.3% coupon with a 2025 maturity. My Solar City bonds have the same maturityare non-negotiableand pay a 5% coupon.

xav- · May 152018

McMuggets said:
Why wouldn't you look at 2022 bonds? They are convertible 3 shares to $1000 par. You get 95% of the upside and far less danger than commons

Your post very well illustrates how such a rip off the stock market can be. I would not be surprised at all if some of the shorts are holding those bonds.

Has anyone got any luck buying tesla bonds recently? I am trying to replace my shares with bonds. I would be open to the convertible bonds too.

mhead110 · Apr 262019

I just spoke to my brokerCharles Schwabre buying the Tesla 2025 bonds. They are not listed on the Schwab web sitebut it is possible to buy in small or large quantities.
They are not registered in the U.S.and are thinly traded (and mostly in large blocksby institutionsso a smaller purchaser won't get as good a price).
The quote I got for 5 bonds was $86.7 = ytm 8.03% (yield to maturity) --- plus about $35 in fees plus whatever interest has accrued. This of course could change at any time. (BTYSchwab is greathas very good intelligent customer service. 24/7 (though bonds only daytime hours)

Symbol

TSLA4530907

CUSIP

U8810LAA1

mhead110 · Apr 262019

The quote of $86.7 gets multiplied by 10so cost is $867 per face value $1000 bond. These are considered quite speculativeof course. They may or may not be a good investment. I have not yet decided/purchased.

mhead110 · Apr 262019

If you search on the FINRA web site using the CUSIPyou can see the chart and history of the bond's trading priceand most of the prices are lowerbut for larger quantities
Bond Trade Activity Search Results (rarely fewer than 2000 bonds per trade)

daniel · Apr 262019

My brokerage recognizes the CUSIPbut does not show any availability. At $867 I'd buy some of those. But not in institutional quantities. I'd probably buy 25 of themcertainly not more than 50.

Sublimobile · May 12019

mhead110 said:
I just spoke to my brokerCharles Schwabre buying the Tesla 2025 bonds. They are not listed on the Schwab web sitebut it is possible to buy in small or large quantities.
They are not registered in the U.S.and are thinly traded (and mostly in large blocksby institutionsso a smaller purchaser won't get as good a price).
The quote I got for 5 bonds was $86.7 = ytm 8.03% (yield to maturity) --- plus about $35 in fees plus whatever interest has accrued. This of course could change at any time. (BTYSchwab is greathas very good intelligent customer service. 24/7 (though bonds only daytime hours)

Symbol

TSLA4530907

CUSIP

U8810LAA1

How do you calculate the ytm? I tried looking this up and I get the following calculation.

Coupon yield = 5.3%
Bond price = 86.7

Assuming bond par is $100and issue price is $100...the calculation looks like this

Annual return / Current Bond price

5.3 / 86.7 = 6.11%

What am I missing?

neroden · May 22019

Sublimobile said:
How do you calculate the ytm? I tried looking this up and I get the following calculation.

Coupon yield = 5.3%
Bond price = 86.7

Assuming bond par is $100and issue price is $100...the calculation looks like this

Annual return / Current Bond price

5.3 / 86.7 = 6.11%

What am I missing?

What you're missing is that you pay a discount to face valuebut you get the full face value of the bond at maturity.
100 / 86.7 = 1.1534 (or 15.34%)which over 6 years is an annualized rate of 2.41%
6.11% + 2.41% = 8.52%

This isn't quite rightsince I estimated 6 years and it's not *exactly* six years until maturitybut you get the idea.

Where can I buy Tesla bonds?

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