Tesla Inc. is set to tap a new source of funds to power its expansion plans.
last week filed with the Securities and Exchange Commission to sell securities backed by lease payments on its vehicles.
If completed, it would be Tesla’s first foray into the asset-backed securities market, and comes as the company struggles to get production of its Model 3 to where it has promised it would be.
“Tesla needs to look at all options to finance its operations considering the delays in the production of the Model 3,” said Efraim Levy, an analyst with CFRA.
It’s likely the company will need “something more substantial” from capital markets, he said.
Tesla did not immediately return a request for comment. The regulatory filing did not specify the amount of bonds to be issued or the size of the pool of receivables.
Companies routinely bundle contractual obligations to pay, such as auto loans, credit-card debt, aircraft leases and home-equity loans, to create securities backed by the underlying payments.
Asset-backed securities are a small percentage of the U.S. fixed-income pie, which is dominated by U.S. Treasurys, mortgage-backed securities, and investment-grade corporate bonds.
Tesla issued its first pure bonds in August, selling $1.8 billion in junk-rated senior notes. That came at the height of Wall Street’s excitement about the Model 3, unveiled in late July, and expectations the mass-market sedan’s production ramp would unfold as smoothly as Chief Executive Elon Musk had predicted.
The bonds fell under par within a week of issuance. The 5.300% notes, which mature in 2025, were trading at 95.80 cents on the dollar on Monday to yield 6.000%, according to trading platform MarketAxess. On a spread basis, they were trading at 334 basis points above comparable Treasurys.
Tesla has about $10 billion in long-term debt, which includes loans, convertible bonds and other instruments, according to FactSet.
Tesla last week denied a CNBC report about fresh delays with the Model 3 related to its batteries, calling the report “extremely misinformed and misleading.”
Earlier this month, Tesla reported disappointing fourth-quarter delivery numbers and, more crucially, pushed back for a second time the goal of producing Model 3s at a rate of 5,000 a week. It said it would reach that target by the end of the second quarter.
Tesla had said it would get to 5,000 Model 3 sedans a week in 2017 and then on to 10,000 a week in 2018, but soon pushed back its 2017 goal to late in the first quarter of 2018, putting pressure on the company’s cash position.
The company is slated to report fourth-quarter earnings after the bell on Feb. 6. In its third-quarter report, it listed under its assets a net $3.8 billion in operating lease vehicles. Tesla leases Model S and Model X vehicles, and said on its third-quarter letter to investors it isn’t planning to offer leasing for the Model 3 at least initially.
Analysts polled by FactSet expect the car maker to report an adjusted loss of $3.05 a share on sales of $3.3 billion for the fourth quarter, which would compare with an adjusted loss of 69 cents a share on sales of $2.3 billion in the year-ago period.