After reading the following articles on Tesla, what are the positives and negatives regarding the company's credit quality. Would you buy the Tesla bonds? Why or why not? Keep in mind that these articles were from several years ago, when Tesla was not nearly as financially secure as it is now.

Deal's proposed yield of 5.25% is low considering company's junk rating Tesla plans to offer an eight-year, $1.5 billion unsecured bond this week. PHOTO: JAMES GLOVER By Matt Wirz and Sam Goldfarb Aug. 9,20176:00 a.m. ET Tesla TSLA 2.76% has raised billions of dollars in equity by selling stock investors a story of unlimited growth. Now they're hoping the same playbook will work with bond investors. It's not yet clear how effective the approach will be. The deal is being proposed at a yield of 5.25%, low considering the company's junk rating. That reflects investors' willingness to accept modest yields in a market starved for new deals, but some are concerned about the company's losses and aggressive financial projections. Although the electric car maker's stock could produce high returns if Tesla succeeds in competing with conventional auto makers, bondholders will only collect interest on their investments and could be wiped out if the company flops. That capped return means potential bond buyers are focused mostly on the risk the company won't repay them. "This is basically an equity story," said Michael Cazayoux, a high yield analyst at KDP Asset Management. "The bond market is more of a professional market and we're looking at it from credit metrics." Debt investors who have heard Tesla's pitch for the eight-year, $1.5 billion unsecured bond this week say it is a little different than the normal one they get from potential borrowers. Executives and bankers have focused on Tesla's near- $60 billion market value and lofty ambitions while placing less emphasis on the details of its actual financial performance. Trying to assuage investors' concerns during a meeting in Manhattan on Monday, Chief Executive Elon Musk compared the Tesla's near-term production challenges to sausage-making, saying a somewhat ugly process would ultimately pay dividends. Tesla's leadership in the electronic vehicle industry and its status as the mostvaluable U.S. auto maker are both factors that will help some bond buyers overlook the company's lack of profitability, some fund managers said. And the bond deal is small enough that underwriter Goldman Sachs Group Inc. is expected to find buyers for it, especially given this summer's scarcity of other new bond sales in the market. The trouble for bond analysts evaluating Tesla is the uncertainty about when the company will start making cash rather than spending it. The firm had about $3 billion of cash in June - and would increase that by 50% with the bond offeringbut is projected to spend $2 billion in the second half of 2017 . "The early-stage nature of Tesla makes it something we're not interested in," says William Zox, chief investment officer at mutual-fund firm Diamond Hill Capital Management Inc. The cash burn is likely to continue throughout next year and the company could return to bond markets for more funds to pay for its new product line, the moderately priced Model 3, says Nishit Madlani, an analyst for S\&P Global Ratings, which rates the company B-minus. Tesla's leverage, a risk measure that compares debt to earnings before interest, tax, depreciation and amortization, is about six times but will likely rise to eight times by the end of the year, Mr. Madlani said. READ MORE - Heard On The Street: Tesla's Big Reveal Shows a Rough Road Ahead - Tesla's Second-Quarter Sales Hit by Production Shortfall Tesla is burning through cash at a rapid pace to ramp up production before traditional auto makers catch up. That means the company is likely to keep issuing junk bonds in coming years to keep growing and subsequent debt sales could be harder to place, fund managers say. The more debt the company takes on, the riskier the investment becomes for bondholders and Tesla has already borrowed $4.5 billion of loans that would rank ahead of the bonds if the company ever defaulted. Debt markets are typically inhospitable to startup ventures because bond investors put a priority on getting repaid on a fixed schedule, something nascent companies can rarely guarantee. The mass bankruptcies of startup telecommunications companies like Global Crossing Ltd. and Iridium Communications Inc. that borrowed tens of billions of dollars of junk debt in the 1990 s serve as cautionary tales for many fund managers. Write to Matt Wirz at matthieu.wirz@wsj.com and Sam Goldfarb at sam.goldfarb@wsj.com Tesla Bonds Tumble in Sign of Concern Over Finances The price has dropped to 97.75 cents on the dollar in recent trading, pushing up the yield Tesla sold $1.8 billion of low-rated bonds on Aug. 11 to help pay for the Model By Matt Wirz Aug. 21, 20175:27 p.m. ET Tesla Inc.'S TSLA 2.76% first bonds have fallen more than 2% in price since their issuance 10 days ago, the latest sign of Wall Street's ambivalence over the electriccar maker's prospects. The Palo Alto, Calif., company sold $1.8 billion of low-rated bonds on Aug. 11 to help pay for the Model 3, its first mass-market car. Tesla took advantage of investors' thirst for higher-yielding securities, selling debt at an annual yield of 5.3% - more than 3 percentage points above comparable Treasurys. But many investors sat out the deal, questioning the wisdom of buying bonds from a company that hasn't turned an annual profit and is drastically increasing its spending in a bid to break into the capital-intensive auto market. "God love them, they took advantage of a super strong market to get super low financing," says Jack Flaherty, a bond portfolio manager at GAM Holdings AG who did not buy the new deal. A spokesman for Tesla declined to comment. The price of the bond has dropped to 97.75 cents on the dollar in recent trading, pushing the yield up to 5.65%, according to data from MarketAxess. Bond yields rise when prices fall. Trading has been heavy: Tesla bonds were the most actively traded junk bonds Monday with about $92 million of the debt trading hands, according to MarketAxess. The bonds are being closely watched by investors because Tesla has become a stock-market favorite. Tesla shares are up 58\% this year despite a 2.8% decline Monday. READ MORE - Who Wants to Buy a Tesla Bond? - Tesla's Second-Quarter Sales Hit by Production Shortfall - Tesla Model 3 Test Drive: Car Has Bite and Simple Interior The firm up until this month had never issued traditional bonds that must be paid off at maturity. Instead Tesla has raised $6 billion by selling shares or bonds convertible into stock. Many high-yield bond prices fell last week as investors pulled about $1 billion from the market, according to Thomson Reuters Lipper data. Tesla bonds declined more than similarly rated ones because they pay less interest, investors said. "It's more attractive now but it's not a level I'm willing to step into yet," Mr. Flaherty said. - Charley Grant and Sam Goldfarb contributed to this article. Write to Matt Wirz at matthieu.wirz@wsj.com Appeared in the August 22, 2017, print edition as 'Tesla Bonds Fall on Investors' Concerns.' Deal's proposed yield of 5.25% is low considering company's junk rating Tesla plans to offer an eight-year, $1.5 billion unsecured bond this week. PHOTO: JAMES GLOVER By Matt Wirz and Sam Goldfarb Aug. 9,20176:00 a.m. ET Tesla TSLA 2.76% has raised billions of dollars in equity by selling stock investors a story of unlimited growth. Now they're hoping the same playbook will work with bond investors. It's not yet clear how effective the approach will be. The deal is being proposed at a yield of 5.25%, low considering the company's junk rating. That reflects investors' willingness to accept modest yields in a market starved for new deals, but some are concerned about the company's losses and aggressive financial projections. Although the electric car maker's stock could produce high returns if Tesla succeeds in competing with conventional auto makers, bondholders will only collect interest on their investments and could be wiped out if the company flops. That capped return means potential bond buyers are focused mostly on the risk the company won't repay them. "This is basically an equity story," said Michael Cazayoux, a high yield analyst at KDP Asset Management. "The bond market is more of a professional market and we're looking at it from credit metrics." Debt investors who have heard Tesla's pitch for the eight-year, $1.5 billion unsecured bond this week say it is a little different than the normal one they get from potential borrowers. Executives and bankers have focused on Tesla's near- Deal's proposed yield of 5.25% is low considering company's junk rating Tesla plans to offer an eight-year, $1.5 billion unsecured bond this week. PHOTO: JAMES GLOVER By Matt Wirz and Sam Goldfarb Aug. 9,20176:00 a.m. ET Tesla TSLA 2.76% has raised billions of dollars in equity by selling stock investors a story of unlimited growth. Now they're hoping the same playbook will work with bond investors. It's not yet clear how effective the approach will be. The deal is being proposed at a yield of 5.25%, low considering the company's junk rating. That reflects investors' willingness to accept modest yields in a market starved for new deals, but some are concerned about the company's losses and aggressive financial projections. Although the electric car maker's stock could produce high returns if Tesla succeeds in competing with conventional auto makers, bondholders will only collect interest on their investments and could be wiped out if the company flops. That capped return means potential bond buyers are focused mostly on the risk the company won't repay them. "This is basically an equity story," said Michael Cazayoux, a high yield analyst at KDP Asset Management. "The bond market is more of a professional market and we're looking at it from credit metrics." Debt investors who have heard Tesla's pitch for the eight-year, $1.5 billion unsecured bond this week say it is a little different than the normal one they get from potential borrowers. Executives and bankers have focused on Tesla's near- $60 billion market value and lofty ambitions while placing less emphasis on the details of its actual financial performance. Trying to assuage investors' concerns during a meeting in Manhattan on Monday, Chief Executive Elon Musk compared the Tesla's near-term production challenges to sausage-making, saying a somewhat ugly process would ultimately pay dividends. Tesla's leadership in the electronic vehicle industry and its status as the mostvaluable U.S. auto maker are both factors that will help some bond buyers overlook the company's lack of profitability, some fund managers said. And the bond deal is small enough that underwriter Goldman Sachs Group Inc. is expected to find buyers for it, especially given this summer's scarcity of other new bond sales in the market. The trouble for bond analysts evaluating Tesla is the uncertainty about when the company will start making cash rather than spending it. The firm had about $3 billion of cash in June - and would increase that by 50% with the bond offeringbut is projected to spend $2 billion in the second half of 2017 . "The early-stage nature of Tesla makes it something we're not interested in," says William Zox, chief investment officer at mutual-fund firm Diamond Hill Capital Management Inc. The cash burn is likely to continue throughout next year and the company could return to bond markets for more funds to pay for its new product line, the moderately priced Model 3, says Nishit Madlani, an analyst for S\&P Global Ratings, which rates the company B-minus. Tesla's leverage, a risk measure that compares debt to earnings before interest, tax, depreciation and amortization, is about six times but will likely rise to eight times by the end of the year, Mr. Madlani said. READ MORE - Heard On The Street: Tesla's Big Reveal Shows a Rough Road Ahead - Tesla's Second-Quarter Sales Hit by Production Shortfall Tesla is burning through cash at a rapid pace to ramp up production before traditional auto makers catch up. That means the company is likely to keep issuing junk bonds in coming years to keep growing and subsequent debt sales could be harder to place, fund managers say. The more debt the company takes on, the riskier the investment becomes for bondholders and Tesla has already borrowed $4.5 billion of loans that would rank ahead of the bonds if the company ever defaulted. Debt markets are typically inhospitable to startup ventures because bond investors put a priority on getting repaid on a fixed schedule, something nascent companies can rarely guarantee. The mass bankruptcies of startup telecommunications companies like Global Crossing Ltd. and Iridium Communications Inc. that borrowed tens of billions of dollars of junk debt in the 1990 s serve as cautionary tales for many fund managers. Write to Matt Wirz at matthieu.wirz@wsj.com and Sam Goldfarb at sam.goldfarb@wsj.com Tesla Bonds Tumble in Sign of Concern Over Finances The price has dropped to 97.75 cents on the dollar in recent trading, pushing up the yield Tesla sold $1.8 billion of low-rated bonds on Aug. 11 to help pay for the Model By Matt Wirz Aug. 21, 20175:27 p.m. ET Tesla Inc.'S TSLA 2.76% first bonds have fallen more than 2% in price since their issuance 10 days ago, the latest sign of Wall Street's ambivalence over the electriccar maker's prospects. The Palo Alto, Calif., company sold $1.8 billion of low-rated bonds on Aug. 11 to help pay for the Model 3, its first mass-market car. Tesla took advantage of investors' thirst for higher-yielding securities, selling debt at an annual yield of 5.3% - more than 3 percentage points above comparable Treasurys. But many investors sat out the deal, questioning the wisdom of buying bonds from a company that hasn't turned an annual profit and is drastically increasing its spending in a bid to break into the capital-intensive auto market. "God love them, they took advantage of a super strong market to get super low financing," says Jack Flaherty, a bond portfolio manager at GAM Holdings AG who did not buy the new deal. A spokesman for Tesla declined to comment. The price of the bond has dropped to 97.75 cents on the dollar in recent trading, pushing the yield up to 5.65%, according to data from MarketAxess. Bond yields rise when prices fall. Trading has been heavy: Tesla bonds were the most actively traded junk bonds Monday with about $92 million of the debt trading hands, according to MarketAxess. The bonds are being closely watched by investors because Tesla has become a stock-market favorite. Tesla shares are up 58\% this year despite a 2.8% decline Monday. READ MORE - Who Wants to Buy a Tesla Bond? - Tesla's Second-Quarter Sales Hit by Production Shortfall - Tesla Model 3 Test Drive: Car Has Bite and Simple Interior The firm up until this month had never issued traditional bonds that must be paid off at maturity. Instead Tesla has raised $6 billion by selling shares or bonds convertible into stock. Many high-yield bond prices fell last week as investors pulled about $1 billion from the market, according to Thomson Reuters Lipper data. Tesla bonds declined more than similarly rated ones because they pay less interest, investors said. "It's more attractive now but it's not a level I'm willing to step into yet," Mr. Flaherty said. - Charley Grant and Sam Goldfarb contributed to this article. Write to Matt Wirz at matthieu.wirz@wsj.com Appeared in the August 22, 2017, print edition as 'Tesla Bonds Fall on Investors' Concerns.' Deal's proposed yield of 5.25% is low considering company's junk rating Tesla plans to offer an eight-year, $1.5 billion unsecured bond this week. PHOTO: JAMES GLOVER By Matt Wirz and Sam Goldfarb Aug. 9,20176:00 a.m. ET Tesla TSLA 2.76% has raised billions of dollars in equity by selling stock investors a story of unlimited growth. Now they're hoping the same playbook will work with bond investors. It's not yet clear how effective the approach will be. The deal is being proposed at a yield of 5.25%, low considering the company's junk rating. That reflects investors' willingness to accept modest yields in a market starved for new deals, but some are concerned about the company's losses and aggressive financial projections. Although the electric car maker's stock could produce high returns if Tesla succeeds in competing with conventional auto makers, bondholders will only collect interest on their investments and could be wiped out if the company flops. That capped return means potential bond buyers are focused mostly on the risk the company won't repay them. "This is basically an equity story," said Michael Cazayoux, a high yield analyst at KDP Asset Management. "The bond market is more of a professional market and we're looking at it from credit metrics." Debt investors who have heard Tesla's pitch for the eight-year, $1.5 billion unsecured bond this week say it is a little different than the normal one they get from potential borrowers. Executives and bankers have focused on Tesla's near