Author Topic: solar city 4% bonds  (Read 1952 times)

k-vette

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solar city 4% bonds
« on: October 23, 2014, 08:04:32 PM »
Anyone have thoughts on this?  I just got a message about it today.  4% bond with solar city seems like a good thing.

milesdividendmd

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Re: solar city 4% bonds
« Reply #1 on: October 23, 2014, 09:14:53 PM »
Term? Duration? Bond rating?

My guess is that the 4% reflects a combination of credit and duration risk, not knowing anything about this particular issuance.

KingCoin

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Re: solar city 4% bonds
« Reply #2 on: October 27, 2014, 07:04:25 PM »
You can read the prospectuses here:
https://solarbonds.solarcity.com/available-bonds/

This strikes me as a horrendous investment (as most bonds pitched directly to retail investors are).

You'd be lending to a company in an industry notorious for frequent bankruptcies, that makes no profit, for 2-4% maximum return. Not only that, you can't sell these bonds and must hold them to maturity, making liquidity as bad as possible. Seriously, why? These bonds are sold to retail investors because institutional investors would laugh these terms out of town.

Much more attractive is buying the SCTY convertible bonds which yield 3.15% and have an embedded call option, so you can participate in the upside scenario for the company. Or just buying the equity outright if you're a true believer in the company.

Abe

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Re: solar city 4% bonds
« Reply #3 on: October 27, 2014, 08:27:10 PM »
Don't buy the bonds for 3 reasons: Lack of diversity, can't sell, and no tax benefits. It's a marketing gimmick (and I do believe in the company's general premise, but this is silly).

KingCoin

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Re: solar city 4% bonds
« Reply #4 on: October 27, 2014, 09:06:45 PM »
Don't buy the bonds for 3 reasons: Lack of diversity, can't sell, and no tax benefits. It's a marketing gimmick (and I do believe in the company's general premise, but this is silly).

Agreed. The way they pitch and brand them, it's as if it's a charitable endeavor.

While I have no problem with ethical investing, the subtle obfuscation and onerous terms makes this program feel kind of skeezy to me. There's no question that it's designed to pick off uninformed retail investors.