Tesla Plans $783 Mln Debt Sale Backed by Car Leases

Tesla is preparing to sell $783 million in debt backed by auto lease agreements, aligning with the recent surge in asset-backed securities (ABS) tied to the automotive sector.

The deal, managed by Société Générale, marks Tesla’s second ABS transaction of the year, with pricing expected next week, according to a source familiar with the matter. The individual spoke on condition of anonymity due to the sensitivity of the information.

In March, Tesla’s first ABS sale raised $750 million, offering a 5.53% coupon on its highest-rated tranche. Neither Tesla nor Société Générale has yet responded to requests for comment.

While Tesla has utilized the ABS market like other major US automakers, it hasn't relied on it as extensively as some competitors. 

Last year, Tesla issued around $4 billion in ABS, a record for the company. By comparison, Ford Motor Co. priced a $1.7 billion ABS deal last Thursday.

The ABS market, similar to other segments of US debt markets, has seen significant growth this year, as interest rates begin to decline and credit spreads tighten. As a result, ABS issuance is on track to approach levels not seen since the record year of 2021.