S&P Global Ratings released its rating on Tesla Inc.’s debt on Thursday. increased, putting the company’s creditworthiness just two steps away from its coveted investment-grade rating.
S&P increased Tesla’s TSLA,
bonds to BB, from BB, with a positive outlook. Above that on the S&P scale are BB + and A3, the first rung of investment grade.
Tesla’s “increasing liquidity has significantly reduced its financial risk,” the S&P analysts said.
Related: Tesla’s market cap zooms beyond $ 600 billion
Tesla recently completed a $ 5 billion stock sale and also raised $ 7.3 billion earlier this year through the previous stock sale. The company is likely to end the year with more than $ 19 billion in cash and equivalents, reducing its net debt to “essentially zero,” S&P analysts said.
In addition, the company continues to improve operational execution, become more efficient in manufacturing and make progress in its global expansion, they said.
The positive outlook means there is at least a one in three chance that S&P could re-increase its rating on the company’s debt in the next 12 months.
The move comes a day ahead of Tesla’s entry into the S&P 500 index. SPX,
At the start of trading on Monday, Tesla shares will be part of the stock benchmark after being added all at once.
Shares of Tesla are up 676% this year, compared to a gain of about 14% for the S&P.