Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Listed: All the MVNOs in South Africa – 2025 edition

      19 June 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      19 June 2025

      WhatsApp founders hated ads – Meta is adding them anyway

      19 June 2025

      China’s car factories run cold as price war masks deep overcapacity

      19 June 2025

      Yellow Card, Visa in deal to hasten stablecoin uptake in Africa

      19 June 2025
    • World

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Yahoo tries to make its mail service relevant again

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Investment » Musk has 143 days before creditors start demanding money

    Musk has 143 days before creditors start demanding money

    By Agency Staff10 October 2018
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Elon Musk. Image c/o Nasa

    One hundred and forty-three days. That’s how much time Elon Musk has till the big bills start coming due in the debt market.

    That, in truth, wouldn’t be considered a ton of time in most circumstances. But in 2018, with capital markets still minting bonds and loans by the trillions, it’s still relatively comfortable runway for a company like Tesla to secure a financial reprieve.

    So, despite all the hand-wringing over the manufacturing setbacks and the perplexing Musk tweets and the run-ins with regulators, Tesla’s stock still trades at astronomical valuations and its bonds show almost no concern of a default in the near term.

    It’s only five months, but as long as there isn’t some global liquidity crisis, they should be able to access the capital markets…

    For now, at least. The question is whether Musk can use these 143 days to appease the Securities and Exchange Commission with changes to Tesla’s board — including his own removal as chairman — and then start producing electric cars fast enough to generate the cash needed to either start paying back those debts outright or convince creditors to roll them over. Third-quarter production numbers were solid, with Tesla hitting its target for its crucial Model 3 sedan, but that growth needs to be sustained in the months ahead.

    “The market isn’t indicating there’s any imminent danger, they have time,” said Chris Hartman, a senior portfolio manager at Aegon Asset Management. “It’s only five months, but as long as there isn’t some global liquidity crisis, they should be able to access the capital markets, albeit at a much higher rate, to keep the story alive.”

    Representatives for Palo Alto, California-based Tesla didn’t respond to requests for comment.

    $1.5-billion

    More than US$1.5-billion out of Tesla’s total debt of $11.5-billion is coming due in the next 13 months. Some of the first maturities actually fall over the next few weeks but the first payment of real consequence comes due on 1 March: a $920-million convertible bond with an equity-conversion price set at $360. With the stock trading now at a mere $262, it seems unlikely that investors will be able to swap into the shares, meaning that Tesla will be on the hook to pay the money back.

    Credit markets, for now, are taking that in stride. Tesla’s 5.3% bonds due in 2025 are now yielding more than 8%, in line with other debt with similar CCC ratings, according to Bloomberg Barclays index data.

    But there are signs of doubt. More creditors are hedging their bets in the derivatives market. It now costs almost $2-million upfront to insure $10-million of Tesla bonds from default over five years in the credit derivatives market. Just two months ago, the upfront cost was less than $1.3-million.

    The Tesla Model 3

    Tesla had $2.2-billion of cash as of 30 June, about half of what it was at the beginning of last year.

    The electric-car maker has put its investors through the wringer with a series of high-profile departures, persistent operational challenges, and most recently, a lawsuit from the SEC that threatened to remove Musk, the visionary who has become synonymous with the Tesla name, from the company entirely.

    He settled that case late last month by agreeing to pay a $20-million fine, appoint a new chairman to the board and add two independent directors. To the relief of investors, he was allowed to stay on as CEO. (Days afterward, Musk unnerved investors again by expressing his frustration with the settlement — which isn’t final yet — in a tweet that mocked the SEC.)

    Musk has said that Tesla won’t need to raise more money as it will generate positive free cash flow in the second half of this year

    Musk has said that Tesla won’t need to raise more money as it will generate positive free cash flow in the second half of this year, and crank out sustainable profits for the first time in its 15-year history.

    In any event, there are no good financing options right now anyways. The most likely, according to Bloomberg Intelligence analyst Joel Levington, would be the sale of another convertible bond or a capital raise in the equity markets.

    The sale of collateralised debt — typically a cheaper form of financing — would be possible too, but such a transaction would likely rattle existing bondholders because the new creditors would jump ahead of them in the repayment line, Levington said.

    All of which just underscores the urgency of Musk’s efforts to sell more cars and start generating steady profits before the first of those big bills comes due.  — Reported by Molly Smith, with assistance from Misyrlena Egkolfopoulou, (c) 2018 Bloomberg LP



    Elon Musk Tesla top
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleAndroid creator working on AI phone that texts for you
    Next Article Interview: eMedia Holdings CEO Andre van der Veen

    Related Posts

    Starlink to South Africa: ‘We are ready to invest’

    17 June 2025

    Up to Icasa whether Starlink gets a licence: Malatsi

    11 June 2025

    EV bloodbath in China

    9 June 2025
    Company News

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025

    Sage brings together HR leaders to explore the future of payroll and people management

    18 June 2025

    Altron: a brand journey, a birthday celebration and a bet on Joburg’s future

    17 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.