- This is a good example of bond covenants. You will notice at least two mentioned in the article: the ratio of current assets to current liabilities and the ratio of total liabilities to total equity.
- We talked about development bonds in class. Perhaps the Tesla case would have been better served by development bonds than a government loan. By using a development bond, Tesla would raise money from private markets rather than the government. However, don’t be fooled. As mentioned in class this still costs the government in lost tax revenue on bond interest. That is okay if additional revenue from sales and income tax as a result of a successful Tesla materialize.
- Note that Goldman Sachs is in the mix again.