Tesla expands credit agreements by $800M
southfield — Tesla boosted its ability to borrow for the second time in about six months, as chief executive officer Elon Musk spends heavily to bring his cheapest electric car yet to market.
The company expanded credit agreements by a combined $800 million to $3.825 billion, according to a regulatory filing on Friday. Tesla boosted its credit lines in December and raised money with equity and debt offerings in March to bolster its balance sheet before starting production this summer of the more affordable Model 3 sedan.
After burning through cash the last two quarters, Tesla flagged it intends to ramp up capital expenditures in the three-month period ending in June. With plans to price the Model 3 close to $35,000 before incentives, the vehicle looms as the linchpin in Musk’s ambitions to manufacture at high volumes and achieve the profitability that’s largely eluded the company.
Tesla shares slipped about 0.2 per cent from its closing share price Friday to $382.81 as of 4.38pm in New York. The stock has surged 79 per cent this year. — Bloomberg
“Development is a continuous process that requires diligent efforts and determination and the latest iteration of the Abu Dhabi plan, launched last year,” said Sheikh Hazza bin Zayed Al Nahyan, ViceChairman of the Abu Dhabi Executive Council.
In an Oxford Business Group (OBG) report under the theme ‘Charting the Emirate’s Way Forward’, he said Abu Dhabi Plan has translated the vision of creating a confident and secure society and to build a sustainable, open and globally competitive economy into a strategic blueprint for all three regions in the emirate.
“The plan contains 25 key objectives and 83 programmes that are implemented through a transparent coordination process between Abu Dhabi’s government entities. It also represents strong commitment to achieve this ambitious vision, as we will examine and assess the outcomes of the plan on a quarterly basis, based on performance indicators and periodic reports to ensure a seamless and effective workflow,” says Sheikh Hazza.
“Transforming the plan’s objectives into concrete results will become a continuous endeavour,
despite challenging macroeconomic headwinds, the emirate shows resilience and is an engine for growth Michelle Solomon, Oxford Business Group regional director
achieved through efforts between all stakeholders,” he added.
At the emirate level, GDP data shows that significant progress towards increased sectoral diversification has been made since the turn of the century: the oil and gas sector’s contribution to aggregate economic growth has declined steadily over the past decade, accounting for 59.3 per cent of GDP at constant prices (2007) in 2005, 51.8 per cent in 2010 and 50.5 per cent in 2014, according to Statistics Centre –Abu Dhabi (Scad). The construction sector, which is the secondlargest component of the economy, accounts for approximately 9.6 per cent of the emirate’s total GDP.
The financial sector is one of the most dynamic areas of economic activity in Abu Dhabi, and in 2017 the recently-launched Abu Dhabi Global Market is likely to be a focus of regional and international attention. The Abu Dhabi Securities Exchange (ADX) has been the centre of equities trading in the capital since its establishment in 2000. With a total market capitalisation of Dh475 billion ($129.3 billion) at the end of 2016, the ADX is the largest exchange in the country, compared tot heDh 337.41 billion capital is at ion of the Dubai Financial Market and Nasdaq Dubai’ s approximately Dh64.3 billion for the same period.
“Abu Dhabi is encouraging the large enterprises that underpin the economy, such as the investment and development company, Mubadala, to use their competitive edge to support small and mediumsized enterprises, to diversify the enterprise base and enable the spread of technological innovation that will maximise growth in high value-added sectors,” says Ali Majed Al Mansoori, chairman of the Abu Dhabi Department of Economic Development.
The emirate’s banking institutions play a leading role in the wider UAE banking sector. As of the third quarter of 2016, the aggregate assets of the nation’s banking industry stood at $662 billion, making it the largest banking industry in the region. Combined with insurance, Abu Dhabi’s vibrant financial sector accounts for approximately seven per cent of the emirate’s GDP, according to Scad.
A landmark moment in the banking sector’s history occurred in April 2017, with the legal completion of a merger between National Bank of Abu Dhabi and First Gulf Bank, the emirate’s two largest banks. The new combined institution — First Abu Dhabi Bank — has assets totalling Dh670 billion and a market capitalisation of approximately Dh111 billion.
In January 2017, credit ratings agency Fitch reaffirmed the emirate’s ‘AA’ rating with a stable outlook, given its ample fiscal and financial buffers. According to figures from Fitch, Abu Dhabi’s sovereign net foreign assets were 282 per cent of GDP in 2016, which is higher than the median of 61 per cent of GDP for other ‘AA’-rated economies. The key drivers for the decisions included strong fiscal and external metrics and a high GDP per capita, balanced by a high dependence on hydrocarbons and a relatively weak economic policy framework. Fitch also stated that it expected a 5.9 per cent deficit in 2017 and higher spending following two years of lower expenditure.
Abu Dhabi enjoys a low outstanding debt level, equivalent to about four per cent of GDP, according to a February 2016 report from Moody’s; raising debt on international markets has emerged as a viable option due to competitive market rates and Abu Dhabi’s solid sovereign rating.
Moreover, a new investment law that the Federal National Council is expected to approve sometime in 2017 will have ramifications for foreign investors who are considering Abu Dhabi as an investment destination, as it promises to open up several economic sectors to 100 per cent foreign ownership.
OBG’s regional director, Michelle Solomon, said the group’s research pointed to myriad openings for investors, particularly as government spending continues to pick up and as the private sector’s contribution to the economy continues to increase.
“Despite challenging macroeconomic headwinds, the emirate continues to show resilience and be an engine for growth, with infrastructural development under way in segments such as power, transportation, tourism and real estate,” she said.
“Investors eyeing the market’s potential have plenty to consider.”
— sandhya@khaleejtimes.com