April 4 (Reuters) - Tesla Inc’s $1.8 billion junk bond price fell by the most in seven months and the cost to insure its debt against default surged on Thursday after a bigger-than-expected drop in first-quarter deliveries.
The electric vehicle maker’s 5.3% senior unsecured note due in August 2025 fell 2.17 cents to a bid price of 85.2 cents on the dollar, with its yield rising nearly half a percentage point to 8.34% in active European trading. It was the largest price drop since September.
The bond’s yield spread, the measure of additional compensation demanded by investors to own the security rather than safe-haven U.S. Treasuries, widened by 50 basis points. The cost for a five-year credit default swap, a form of insurance against default, rose by the most in a day since October. (Reporting By Dan Burns)