Tesla CEO Elon Musk’s recent purchase of $65 million of SolarCity debt is quite unusual and does not really send a positive signal to investors, says Charles Elson, an authority on corporate governance at the University of Delaware. The idea of a senior executive or a director purchasing debt is highly unusual and does raise some questions, according to the scholar.SolarCity Elon Musk launching Tesla Model 3

No long-term value

In an interview with CNBC, Elson said that it is “very odd.” His main concern is that owning bonds puts directors and officers at “cross-fiduciary purposes” with shareholders and does not send a positive signal.

“When you see an officer buying stock, it is a good sign — it means the business might have a good future,” he said. “If you see them buying debt, you wonder, what is the long-term value.”

Elson added that debtholders have different risk profiles than equity holders. For instance, if a company goes bankrupt, then the bondholders, even those holding unsecured notes, are usually paid before shareholders. In short, the main difference is that a debtholder just wants to be repaid, while an equity holder wants to create long-term value.

The recent purchase by Musk and his cousins Lyndon and Peter Rive has been called a “troubling move” by Stephen Diamond, an advisor to Tesla investor group CtW, notes CNBC. Also there were concerns raised when SpaceX, Musk’s rocket and space company, bought SolarCity bonds in the past.

Why did the trio invest in SolarCity bonds?

In a statement sent to CNBC, Lyndon Rive said they invested in SolarCity bonds because it is a very efficient way for the company to raise capital without paying any expensive banking fee. Rive added that the bonds are issued online directly and that there are no fees for investors either.

“Ultimately Elon, Pete, and I expect to be minority investors,” added Rive.

Solar bonds, senior, unsecured bonds that mature in early 2018 and pay 6.5% interest, are at issue. These SolarCity bonds are open to retail investors. Similar to Tesla, the solar company is burning cash at an alarming rate. In order to reduce the cash burn, the Rives brothers slashed their salaries from $275,000 to $1.

SolarCity is looking to raise some much-needed capital and thus is selling $124 million worth of bonds. The solar company now will not have to depend on investors as quite a lot of money, $100 million, is coming from Musk and his cousins.