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Tesla Junk Bond Prices Head Down as Elon Musk Lights Up

This article was originally published on ETFTrends.com.

Tesla's high-yield bond prices followed the electric car manufacturer's shares, which took a deep dive as the stock plummeted roughly 7% at the opening of today's trading session after reports surfaced that its top executives headed for the exits after founder and CEO Elon Musk smoked marijuana on "The Joe Rogan Experience" podcast.

Prices of the bond fell by 3.5% to 82.75 as of 2:00 p.m. ET. Additionally, the price of the bond has fallen about 9% over the last three months, pressured down further by Musk's executive decisions with respect to Tesla within the past month.

Tesla Junk Bond Prices Head Down as Elon Musk Lights Up
Tesla Junk Bond Prices Head Down as Elon Musk Lights Up

Musk's behavior on the podcast is a culmination of what has been tumultuous times for the electric carmaker founder, which started when he first sent a tweet that he was considering taking the company private at a price of $420 a share, citing that it was "the best path forward." The tweet to privatize Tesla halted trading of the company's shares for 92 minutes, leaving Tesla investors in a panic shortly thereafter.

Related: Elon Musk: Tesla Going Private is ‘Best Path Forward’

After reportedly fielding offers from a Saudi Arabian sovereign wealth fund and tech giant Apple, Musk later reneged and chose Tesla to remain public. Late Thursday, Musk's behavior on Rogan's podcast sparked rumors that his recreational drug might be out of control.

Execs Head for the Exits

In the meantime, Tesla reported today that its chief accounting officer, Dave Morton, submitted his resignation as of Tuesday as a result of the public scrutiny the company faced in the past month.

“Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations,” Morton said in the statement. “This caused me to reconsider my future. I want to be clear that I believe strongly in Tesla, its mission, and its future prospects, and I have no disagreements with Tesla’s leadership or its financial reporting.”

Furthermore, Tesla's human resources chief Gaby Toledano, is not returning from a leave of absence after the company was racked with possible SEC probes after Musk's tweet to go private. Vice president of communications Sarah O'Brien is also leaving as part of a planned departure.

Shares of Tesla have already plunged over 20% within the past month as the company is struggling to secure alternate sources of funding as it continues to burn through cash.

High Yield in Favor

With prices of Tesla bonds falling, it presents a buying opportunity for risk-on investors looking for high-yield options. According to CNBC, the extended bull market has caused high yield debt issues to be in favor, such as the iShares iBoxx High Yield Corporate Bond ETF (HYG) , which ranked second among all ETFs currently as far as inflows from new investors with almost $3 billion.

In August, HYG ranked seventh among all ETFs for monthly flows with a total of almost $1.4 billion. HYG tracks the investment results of the Markit iBoxx® USD Liquid High Yield Index, which is comprised of high yield U.S. corporate bonds that have less than investment-grade quality. Investors who have been able to forego the credit risk have seen total returns of 3.95% the last three years and 1.22% the past year based on Yahoo! Finance performance figures.

For more news and strategy, visit our current affairs category.

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