Tesla boosts its bond financing to $1.8B

Tesla Inc. is increasing its debut bond deal to $1.8 billion as it seeks to finance production of the Model 3 that the electric-car maker has staked its future on.

The eight-year bonds will have a yield of 5.25 percent, in line with initial talk, according to a person with knowledge of the matter, who asked not to be identified because the sale is private. Elon Musk’s company boosted its offering from the original $1.5 billion.

Musk took his charm offensive to the debt market at a meeting for prospective bond buyers in Manhattan last week. He walked away with orders for $600 million after just a few hours, according to investors briefed on the matter. The session, which featured a gleaming blue Model 3 on display, was part of a four-day debtmarketing extravaganza, which included an invitation from Musk for investors to tour the company’s assembly plant.

The tactics worked, as note-holders are proving willing to overlook the company’s negative cash flow and its repeated trips to capital markets to bolster its balance sheet. The debt offering, Tesla’s first of nonconvertible bonds, represents the latest sign of froth in the highyield market, where investors have been turning a blind eye to bond-market basics in search of yield.

The sale was managed by Goldman Sachs Group Inc., Morgan Stanley, Barclays PLC, Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Royal Bank of Canada, the person said.