The big announcement yesterday in the auto business was that Tesla was paying off its ATVM loan off early.
I am puzzled by this, it seems from the outside like a bad business decision.
The ATVM loan was cheap money, carrying an interest rate equal to Treasury notes. Current 10 year notes are below 2%.
The ATVM loan was cheap money, carrying an interest rate equal to Treasury notes. Current 10 year notes are below 2%.
By paying off the ATVM loan early, Tesla traded the cheap government money for stock and a public bond offering of their own notes, also running at about 2% interest.
But Tesla could have done both--kept the ATVM loan and issued their own bonds--and had extra cash with which to develop the Model X and future less expensive vehicles.
Was this as simple as Elon Musk not wanting to be under some government oversight, and not wanting to be seen as a government supported enterprise?
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