S&P affirms Tesla

Standard & Poor’s said it affirmed its unsolicited B- corporate credit rating on Tesla Motors Inc. The outlook remains stable.

At the same time, S&P affirmed the unsolicited B- issue-level ratings on the company’s $920 million 0.25% unsecured convertible notes due 2019, $1.38 billion 1.25% unsecured convertible notes due 2021 and $660 million unsecured convertible notes due 2018.

The unsolicited 4 recovery ratings are unchanged, indicating an expectation for average recovery (30%-50%; lower end of the range) for the noteholders in the event of a payment default.

“Tesla’s free operating cash flow (FOCF) will likely remain meaningfully negative in 2015, in our view,” said S&P credit analyst Nishit Madlani in a news release. “However, with the company’s recent announcement of a new $500 million asset-based credit line, we believe that Tesla’s liquidity cushion over the next 12 months should offer better protection against any potential execution missteps or inefficiencies (related to production and supply-chain management) associated with the upcoming launch of its Model X crossover vehicle.”

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