28/09/18

Tesla Default Probability Hits A Record 48%



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Tesla Default Probability Hits A Record 48%
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With Tesla stock plunging 13%, suffering its biggest one day drop in years as the market was forced to evaluate a world in which Elon Musk is no longer affiliated with the company should the SEC get its wish (a proposition which according to Barclays could wipe out as much as $130 from the TSLA stock price), bond traders are likewise trimming their exposure, which in turn has sent Tesla's default odds to a new all time high.

According to CMA, Tesla credit default swaps - i.e., the upfront cost of protection against default - rose over 1% to 22.8 points, the highest on record. This means that for every $10 million in protection, investors will have to pay $2.28 million upfront. This also means that the implied probability of default over the next 5 years is an all time high of 48%.

Alongside the stock selloff, Tesla's junk bonds fell to 84.75 cents on the dollar, down half a ....

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