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The surge in Tesla's (TSLA) shares after CEO Elon Musk's tweet about going private has had huge, salutary effect on its key convertible bonds and its financing position. By pushing the common stock's price above the $360 level, his tweet has put a $900 million convert issue above its conversion price, which would effectively let the electric-auto maker pay off that obligation in stock instead of cash.

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Tesla has a $920 million 0.25% convertible issue due Feb. 27, 2019, which would be convertible into common at a price of $359.8676 per share. If the stock trades below that price at the conversion price, the holder would be better off taking cash. That would put pressure on Tesla while it continues to burn cash, as of the second quarter. But by being able to redeem the debt in stock would obviate the obligation to come up with over $900 million in cash.

In addition, Tesla also has another 1.25% convertible totaling $1.38 billion that matures Feb. 25, 2021. This issue also converts at the same price, and a common share price over $360 also would obviate the need to pay off this convert in cash.

But one major corporate bond investor, who declined to speak on the record, expressed skepticism about the ability of the junk-rated company's ability to raise the massive amount of debt to take Tesla private, notwithstanding Musk claim in his tweet of "funding secured."

Tesla's stock market value would be over $70 billion at Musk's supposed $420 share price at which the company would be taken private. In addition, it carries $9.5 billion of long-term debt on its balance sheet. That would a huge financing for a junk-rated borrower, to say the least.

Tesla's straight (non-convertible) 5.30% notes due 2025 traded up to 91.875, to yield 6.77%. The notes have a change-of-control provision that would allow them to be redeemed at the holder's option. In that event, note holders who bought at their issuance a year ago would have to get even or a bit ahead relative to the issue's original price of 100.

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