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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