Tesla Inc. completed the sale of $499 million in bonds backed by loans provided to customers purchasing solar equipment, marking its latest venture into asset-backed securities. Deutsche Bank marketed the five-part deal starting Monday, wrapping up the process by Friday. The debt attracted strong demand, with all tranches oversubscribed. Fitch Ratings assigned investment-grade ratings to all tranches, citing the high credit scores of Tesla’s solar loan customers. The top-rated tranche offers a 4.83% coupon.
The latest debt issuance underscores Tesla’s efforts to expand in the asset-backed securities market beyond vehicle leases. Since its 2016 acquisition of SolarCity, Tesla has periodically tapped into solar-backed securities, though recent collateral has mostly come from auto leases and prime auto loans introduced last year. In 2024, Tesla has issued $2 billion in asset-backed debt, down from nearly $4 billion in 2023.
This latest bond sale also comes amid robust growth in the broader asset-backed securities sector, which reached $321 billion this year, according to Bloomberg data—the highest level since the financial crisis. Debt supported by solar assets has surged in particular, hitting $5 billion in 2024, up from $3.7 billion in the same period last year.
The solar industry, however, is facing challenges. Delinquencies on solar loans have hit their highest levels since early in the pandemic, according to Kroll Bond Rating Agency. Additionally, high interest rates have impacted affordability for solar installations, contributing to recent bankruptcies for companies like Lumio and SunPower Corp.
