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On Thursday, S&P Global Ratings upgraded its Tesla Inc. debt rating, leaving the company’s credit rating to just two steps away from the coveted investment grade classification.
S&P increased Tesla’s TSLA,
bonds to BB, from BB-, with a positive outlook. Above the S&P scale are BB + and A3, the first rung of the investment category.
“Tesla’s growing liquidity has significantly reduced its financial risk,” S&P analysts said.
Related: Tesla’s market cap exceeds $ 600 billion
Tesla recently closed a $ 5 billion share sale and also raised $ 7.3 billion earlier this year through its previous share sale. The company will likely end the year with more than $ 19 billion in cash and cash equivalents, reducing its net debt to “essentially zero,” S&P analysts said.
“In addition, the company continues to improve operational execution, become more efficient in production and progress in its global expansion,” they said.
The positive outlook means that there is at least one in three chances that S&P will raise its corporate debt rating again in the next 12 months.
The move comes a day before Tesla’s inclusion in the S&P 500 index. SPX,
At the start of trading on Monday, Tesla shares will be part of the equity benchmark, having been added at the same time.
Tesla shares have gained 676% this year, compared to gains of around 14% for the S&P.
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