Moody’s uplift has both symbolic and practical value. Companies that rise from junk to investment grade typically benefit from cheaper financing by attracting a deeper pool of investors. And traditionally, a high-grade credential from at least two agencies is enough to be formally considered a blue-chip credit among ratings-sensitive investors.
“It’s a historic event for Tesla,” said Joel Levington, a Bloomberg Intelligence credit analyst. “We continue to believe the rating upgrade cycle for the company has legs, potentially narrowing views of credit risk against Volkswagen.”
Tesla’s stock, which plummeted in 2022, rose 5.98 percent to $194.21 in mid-day trading on Tuesday and is up nearly 50% so far this year. The company became the first junk-rated company to have a market value of more than $1 trillion in October 2021.
The electric-vehicle maker is the eighth largest company in the world by market cap, and its valuation helped turn Musk into one of the world’s richest people.
Tesla delivered over 1.3 million cars globally in 2022 and will report first quarter figures in early April. It has also paid down its debt while remaining the world’s leading maker of EVs, and recently announced that its next auto plant will be in Mexico.
The low financial leverage and best-in-class margins explain why ratings companies have steadily ratcheted up Tesla’s grade, BI’s Levington said in an interview in October.