Billion-Dollar Gamble

Billion-Dollar Gamble

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  • Electric truck innovator Rivian Automotive (RIVN) is taking a bold new step—into convertibles, but not the two-seater kind. The EV maker announced its plans to raise $1.3 billion with green convertible senior notes, maturing in 2029.
  • Buying a convertible note is like acquiring a two-for-one special – debt and stock options in one convenient package/ Rivian, as an electric vehicle manufacturer, is eligible for the 'green' designation on their offering, making them more attractive to bond investors and those with environmentally-conscious portfolios.

Why it matters

Investors like convertible notes for security and upside potential, while companies like them for lower interest rates. Stock investors may not like them due to potential dilution of their stakes when the notes become shares, as seen with Rivian's 5.5% premarket drop on Tuesday.


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