Morning Commentary: Rivian in focus; new offering looks cheap; outstanding notes active

By Abigail W. Adams

Portland, Me., Oct. 5 – The convertibles primary market broke its silence with Rivian Automotive Inc. set to test the market with its $1.5 billion offering of seven-year green convertible notes.

The primary market has been dormant for more than one week as Treasury yields hit a multi-decade high.

Market players have questioned what pricing would look like amid the dramatic repricing in the market over the past two weeks.

The one-time speculative credit Rivian came with the answer.

Rivian plans to price $1.5 billion of seven-year green convertible notes after the market close on Thursday with price talk for a coupon of 3.125% to 3.625% and an initial conversion premium of 27.5% to 32.5%.

The offering looked about 3 points cheap, sources said.

It also offered holders of its 4.625% convertible notes due 2029 a good opportunity to switch out of the high dollar-price bonds for a more balanced convertible note.

Rivian’s 4.625% convertible notes due 2029 were dominating the tape in early trade as Rivian’s stock collapsed following the latest offering.

The notes fell about 20 points outright with stock off 18%.

The convertibles made nominal gains on hedge on the move down, a source said.

Rivian’s stock was trading at $19.14, a decrease of 18.5%, shortly before 11 a.m. ET.

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