Tesla's obligation reaches a record level, shares retreat

SAN FRANCISCO (Reuters) – Tesla (TSLA.O) Stock and bond prices fell on Wednesday after chief executive Elon Musk reiterated his attack on a British spelunker he had previously insulted on social media and a day after Mercedes unveiled a challenge to the automaker .

The title fell 2.8% to $ 280.74, the lowest level since the end of May, after dropping 4.2% on Tuesday after Mercedes introduced its first all-electric car in Stockholm.

The $ 1.8 billion high-yield bond issued a year ago reached a record high on Wednesday. It has also become more expensive to insure Tesla's default obligations.

Tesla shares have lost a quarter of their value since August 7, when Musk tweeted that he had secured funding for a plan that had not been disclosed before and that took Tesla privately.

On August 24, Musk abandoned the plan, but faces legal action and an investigation by the US Securities and Exchange Commission on the factual accuracy of his tweet stating that the financing of the operation was "guaranteed". of Musk, long regarded by Tesla's supporters as his most valuable asset.

BuzzFeed News also reported Tuesday that Musk, in an e-mail to the news site, called British diver Vernon Unsworth a "child molester". "

In July, Musk apologized to Unsworth for similar insults that he had made on Twitter after rescuing a dozen Thai schoolchildren and their football coach from a cave. in Thailand. Unsworth, who played a leading role in the rescue, drew Musk's wrath by claiming that a mini-submarine created by the Musk SpaceX rocket company to help rescue "had absolutely no chance to work".

BuzzFeed reported that Unsworth, through his attorney, denied Musk's allegations and found no evidence to support Musk's complaint. Tesla has not responded to Reuters' requests for comment. Reuters has not been able to check the emails reported in the BuzzFeed article.

"Elon Musk's ongoing campaign of vile publication and false accusations against Mr. Unsworth is outrageous," said Unsworth's lawyer, L. Lin Wood, in an email to Reuters.

"Musk has stated publicly and clearly that he" hopes "to be prosecuted. Let me be just as clear in answer – Musk will be sued – not because of his hopes, but because he deserves to be sued, "Wood said.

Previous attacks by Musk against Unsworth on Twitter, and his surprise announcement on Tesla's private takeover, have raised concerns about Musk's judgment and Tesla's ability to influence his behavior.

"He should not tweet about things outside of auto production and the auto industry," said Ivan Feinseth, an analyst at Tigress Financial Partners, who has a "neutral" rating on Tesla. "The board, even though it's friendly with it, has now been put in a position where the company's internal governance has been questioned."

Tesla, who loses money, has spent a lot of money to speed up the production of Model 3, a process that Musk calls "the hell of production". Tesla bulls rely on Musk to increase their production exponentially.

But the company has repeatedly missed production goals.

Marking the start of a German attack on the US automaker, Mercedes on Tuesday presented a SUV with a range of 450 kilometers that, in his opinion, will appeal to luxury customers and Generation Y. This range is comparable to the 295-mile range of Tesla's SUV Model X.

The fall in Tesla's bond prices on Wednesday revealed growing concern over the company's declining cash position. Its $ 1.8 billion bond maturing in August 2025 88160RAE1 = dropped more than one point in price, to a record high of 85.75 cents per dollar.

Tesla is rated "B-less" by Standard & Poor's and "B3" by Moody's Investors Service, with six niches on the bond territory and one notch above the "C" zone generally attributed to issuers in difficulty. The perspectives of both agencies are negative.

According to Markit, Tesla's debt insurance cost against default increased and its five-year credit default swaps, TSLA5YUSAX = MP, hit a one-month high. Combined with an initial payment of 17.2% of the insured value of the bond, it would cost an investor about $ 230,000 to insure a million dollars of Tesla debt for a year, against less than $ 200,000 two weeks ago. 39 l & #; business.