The Darling Of Wall Street Hit A Bump - Standard And Poor's Issues "Junk" Rating For Tesla Stock

Its shares may be the darling of Wall Street, but Tesla Motors Inc. on Tuesday received a far less rousing recommendation from bond raters at Standard & Poor’s Corp. -- which assigned the electric-vehicle maker a B- rating, or “junk” status.

Companies are given junk-bond ratings when Wall Street determines there is an increased possibility of default.

But for savvy investors, having junk bonds in a poorly rated company can pay much higher returns than those from blue-chip companies, because junk-rated companies have to pay higher interest rates to gain access to investors’ capital.

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ParadoX - 5/28/2014 5:58:21 PM

+1 Boost

You mean there corporate bonds have been assigned junk status, not their stock.

The reason being that Tesla lacks the assets to pay off its entire debt should it collapse.