Tesla Halts Bond Sale Backed by Auto Leases Amid Market Turmoil

Tesla Inc. delayed a more than $1 billion offering of bonds backed by leases on its electric vehicles, the third issuer in the past week to halt a sale amid market turbulence, according to people with knowledge of the matter.

Bankers for the auto manufacturer had already placed a significant portion of the bonds with fund managers before marketing was halted, said the people, who asked not to be identified because the offering is private. Surging inflation and worries over the economic fallout from Russia’s war in Ukraine have sent short-term interest rate benchmarks sharply higher in recent weeks. That’s prompting issuers to pause their financing plans until markets have calmed.

Auto-finance company World Omni also postponed an auto lease-backed bond offering on Friday after it had already started marketing it. The same day, “buy now, pay later” lender Affirm Holdings Inc. also delayed an offering of debt backed by consumer installment loans.

Tesla didn’t respond to messages seeking comment. Representatives for the banks arranging the deal, Wells Fargo, Credit Suisse, Barclays, and Citigroup, declined to comment.

At least seven securitized debt deals in all have been shelved since the Russian invasion. Last month, two commercial mortgage bonds and a residential mortgage bond were also delayed amid market weakness, which has been exacerbated by the Federal Reserve’s move toward monetary tightening to fight inflation. The central bank announced its first rate hike since 2018 on Wednesday.