[charlesdm]

You can buy a bond that forces Tesla to repay you $1 in X years, for 89 cents.

Bonds trading below value happen when there is uncertainty whether it can actually be repaid in the future by the company (e.g. maybe it is unsecured debt).

If repaid the yield would have been 5.3% per annum + the 11% difference it trades below value

[ljf]

Is it not also that they will pay you a 5.3 percent dividend every year until repaid? Not that I really know much about this so likely wrong!

[smallnamespace]

The coupon (dividend) is 5.3% per year, and the bond repays in about 7 years, while trading at a 11% discount.

As a first-order approximation, you can imagine that you are getting paid 5.3% + (11% / 7 years) = 6.87%.

A slightly more accurate calculation shows that yield is actually closer to 7.36%. You can find the bond here:

http://markets.businessinsider.com/bonds/tesla_incdl-notes_2...

[barbegal]

Yes Tesla's latest unsecured bonds have a coupon rate of 5.3% which they pay biannually. So for a bond with a face value of $1 they will pay you ~2.6 cents every 6 months.

[charlesdm]

Yes, they pay interest + will (hopefully) repay capital at the expiration date.