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Today in the Market (3/7/2023)

Good Evening! Stocks in the US slumped on Tuesday after Federal Reserve Chair Jerome Powell warned Congress that interest rates are expected to rise “higher” in response to persistent inflation.

The S&P 500 was down 1.53% at the close, the Dow Jones fell by 1.72%, and the Nasdaq Composite decreased by 1.2%.

"GREEN" DEBT

Rivian (RIVN) shares dropped today after the EV manufacturer announced intentions to issue “green” debt. Rivian plans to offer $1.3 billion in “green” senior convertible notes due in 2029, with the option to award an additional $200 million in convertible notes to the initial buyers.

Why is it considered “green” debt? It is consistent with Rivian’s corporate philosophy (it’s a signatory of the Climate Pledge and the first to declare it won’t employ deep-sea mining for batteries) and it intends to use the funds for “green” or environmental reasons.

Moving forward… Rivian’s recent stock volatility may become a recurring occurrence in the absence of further indications of production increases and capital preservation strategies since uncertainties remain as to how many cars the business can produce in 2023.

SOFI LAWSUIT

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Student debt forgiveness activists and experts are somewhat perplexed by SoFi Technology’s (SOFI) latest lawsuit to halt the federal student loan payment suspension.

Why is SoFi doing this? The complaint contends that the payment suspension, which has resulted in millions of dollars in missed revenues for the company’s primary refinancing business, has no legal justification.

How much would it hurt SoFi? SoFi said in a 32-page filing that the loan abatement “has substantially injured” the firm, which has lost $300 to $400 million in refinancing income and $150 to $200 million in profits since March 2020.

Move with caution… According to Katherine McKay, associate director of the Financial Security Program at the Aspen Institute, the majority of SoFi’s prospective refinancing clients would be harmed by the company’s lawsuit to stop the payment pause. Hence, borrowers should exercise caution while refinancing since they cannot rejoin the federal program after they have left it.

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