FX168 Financial News Agency (North America) News Tesla is currently pre-selling bonds worth $0.783 billion on the market, with high-quality borrowers' car leases as collateral support.

This move marks Tesla's increased efforts to enter the active auto leasing-supported securities (ABS) market, enabling Tesla to raise funds to support its strategic goals of ongoing innovation and market share expansion using these bonds backed by high-quality borrower leases as collateral.

With lowering interest rates and improved market conditions, the ABS market continues to heat up, with companies like Tesla taking advantage to advance more financing opportunities.

Issuing asset-backed securities is one of the common financing methods for auto manufacturers. Tesla achieves cash flow for its leasing business by bundling lease contracts and selling them to investors. When lessees pay monthly rent, investors receive corresponding returns.

This approach not only helps businesses raise funds but also supports long-term development through flexible capital operations. The detailed terms and expected date of this bond issuance have not been announced, but Tesla chose to launch this bond on Thursday, in line with the current industry trend, particularly in the backdrop of auto manufacturers and financial sectors obtaining financing through customer credit.

This issuance is part of Tesla's broader financial layout, allowing the company to continue seeking funds for its rapid growth and technological research and development through this strategy. Given Tesla's strong brand influence and large customer base, these bonds may attract investors looking to invest in the electric vehicle and clean energy sectors.

According to an insider, this transaction is being operated by Industrial Bank of France and will be Tesla's second such transaction this year, expected to be priced next week.

The insider requested anonymity as he was not authorized to publicly discuss the transaction. In March, Tesla issued ABS worth $0.75 billion with a maximum face interest rate of 5.53%.

Currently, both Tesla and ​industrial bank of France have not immediately responded to requests for comment.

Similar to other major auto manufacturers in the USA, Tesla has always been a frequent player in the ABS market, but its frequency of financing through securitization is lower than some peers.

In 2022, Tesla's total amount of financing through securitization was close to $4 billion, setting a new historical high for the company.

With interest rates starting to decline this year and bond spreads gradually narrowing, the issuance of ABS in the USA debt market has significantly increased, almost approaching the record levels set in 2021. Auto manufacturers like Tesla have also benefited from this trend, driving more of such financing.

Despite bond issuances aligning with the current industry trends, Tesla's stock price still fell by over 3.8% during Thursday's trading session.

(Source: Tesla)