Bonds for a total of $1.5 billion are scheduled to be sold. However, owing to the unclear legal environment and potential competition, Moody’s Investor Services, a world-renowned credit ratings organization, downgraded Coinbase Global Inc.’s debt issuer rating to non-investment grade or junk grade.
In a study released on Tuesday, Moody’s analysts Fadi Abdel Massih, Donald Robertson, and Ana Arsov wrote:
“Coinbase’s financial profile suggests investment-grade credit strength, but for now the uncertain regulatory environment and fierce competition offset these strengths.”
Coinbase offers two types of bonds: 7-year bonds with a coupon rate of 3.375 percent due in 2028 and 10-year bonds with a coupon rate of 3.625 percent due in 2031.
Julie Chariell, a Bloomberg industry research analyst, stated that:
“The strong demand is clearly a big endorsement by debt investors.”
This bond issue is good news for the cryptocurrency sector as a whole, as well as Coinbase. This product allows investors to immediately profit from the benefits of cryptocurrencies without investing in them or earning interest on them.
Coinbase did not receive the lowest borrowing rate since the bonds are one grade below investment grade. However, the average yield of comparably rated bonds is generally around 2.86 percent, which is lower than the current interest rate of over 3%.
Coinbase isn’t the first company in the United States to sell cryptocurrency-related bonds. For example, MicroStrategy Inc. stated in June that it aims to sell $400 million in senior secured notes to eligible institutional purchasers to acquire more money to make more Bitcoin transactions.
Coinbase Global Inc, a Nasdaq-listed cryptocurrency exchange, has announced intentions to raise fresh capital by offering $1.5 billion in aggregate principal amount of its Senior Notes to potential investors yesterday.