Investing.com - Moody's has assigned a B2 corporate family rating and a Stable outlook to Tesla (NASDAQ:TSLA) following the company's issuance of new notes. The rating agency also set a speculative grade liquidity rating of SGL-3.
Earlier Tesla announced that it intends to raise about $1.5 billion in a bond offering to fund the production of the Model 3, its newest electric sedan. Moody's noted the company's rapid ramp up in model 3 production as significantly increasing the company's capital expenditures. "As a result of the rapid ramp up in Model 3 production and the significant increase in capital expenditures required under the production plan, we expect that Tesla will remain free cash flow negative into 2019. Given this negative free cash flow outlook, the uncertainties associated with the launch of the Model 3, and the potential cash requirements necessary to cover the maturities of its convertible debt, Tesla will face large cash requirements through 2018. The liquidity resources available to the company provide moderately adequate coverage of these cash requirements. This is reflected in the SGL-3 liquidity rating. Tesla's principal liquidity sources include the company's $3 billion in cash, proceeds from the proposed note offering, and $900 million available under its $1.9 billion secured revolver. Without the proceeds from the note offering, Tesla's liquidity position would be stressed,” according to the note from Moodys.