• Tesla has turned to debt rather than equity to raise $1.8 billion.

• The company's story has been driven by its stock price.

• Bond investors aren't necessarily buying into that story.

As expected, Tesla is raising more money.

As not expected, that money will be in the form of debt: $1.8 billion in unsecured bonds, with an eight-year maturity and an anticipated interest rate of 5.5%.

The bonds will be junk, rated B- and B3 by S&P and Moody's respectively, and investors can't get enough, even though that yield could be higher.

Tesla's previous two capital raises were all-equity and a blend of equity and convertible debt (debt that becomes equity down the road). CEO Elon Musk hinted that any new raises might be debt-based on Tesla's second-quarter earnings call, but ever since the Tesla bond issue was announced this week, analysts have been chewing over why the company, with its stock price at near all-time highs, wouldn't simply tap that the seemingly bottom reservoir of bullish Wall Street optimism.

Explanations abound. Musk doesn't want to further dilute the shares of existing shareholders, including himself, risking a loss of control. Tesla is reluctant to do an equity capital raise this year and them possibly another one next year, even if the markets seem infinitely patient at being treated like an ATM. Better to borrow at relatively low rates now before junk yields increase.

Tesla is in charge of its balance sheet and can do as it likes. But selling this type of bond represents a dangerous new plot twist.

A "story" stock

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For several years now, Tesla has been the biggest "story" stock in the world.

Tesla is known as a powerful Silicon Valley disrupter of the automotive (and energy) status quo. The company's charismatic celebrity CEO and sexy new all-electric cars have propelled Tesla's market capitalization past Fiat Chrysler Automobiles, Ford, and GM, even as Tesla losing money quarter after quarter and prepares to burn another $2 billion in cash before the end of 2017.

The company's debt has been a distantly secondary consideration. As Tesla adds more debt, however, it invites a different type of analysis. Stock investors are either very bullish or very bearish on Tesla, as evidenced by the clobbering that short sellers have taken since the beginning of 2017 — and the ongoing willingness of short-sellers to continuing shorting the stock.

There are some middle-of-the-roaders who think Tesla is now wildly overvalued, but don't think it is going to collapse — I consider myself one of these folks. But most of the chatter around Tesla either involves the company taking more than 50% of the new-vehicle market share in the US (Gene Munster's preposterous thesis) or predicts bankruptcy before Musk's dreams can be realized.

Stocks can go through crazy fluctuations in value, and Tesla's shares are typically quite volatile, with surges and swoons common. The short-term action is exciting.

A longer story

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Bonds are a longer-term play, and for that reason, bond buyers usually take a more macro view of the companies whose debt they own. The overall risk is succinctly expressed in terms of ratings — investment-grade versus high-yield "junk" versus wackadoodle deep subprime stuff — and the interest rate. The assessment is more emotionless. The story has to be pretty good, and it doesn't always keep getting better.

Story continues