fxs_header_sponsor_anchor

Coinbase increases junk bond offering to $2B after investors swarm

Leading U.S.-based cryptocurrency exchange Coinbase has seen enormous demand for its junk bond offering, with the firm increasing the size of the sale by one-third from $1.5 billion to $2 billion.

According to Economic Times, at least $7 billion worth of orders were placed in competition for equal quantities of seven and 10-year bonds, offering interest rates of 3.375% and 3.625% respectively.

The publication cites an anonymous source as claiming the interest rates were cheaper than the initial quotes offered by Coinbase, with the influx of demand suggesting buyers hold a higher opinion of the company’s credit-worthiness than initially suspected by the exchange.

“The strong demand is clearly a big endorsement by debt investors,” commented Bloomberg Intelligence analyst Julie Chariell.

However, the exchange’s bonds were rated one rank below investment-grade, with Bloomberg bond indexes indicating that similar debt offerings fetch a 2.86% yield on average.

Junk bonds refer to corporate debt issued by a company that does not have an investment-grade credit rating. Due to the reduced credit rating, junk bonds command higher interest rates than investment-grade corporate bonds.

Coinbase announced its debt offering on Sept. 13, stating the funds may be used for “continued investments in product developments” and “potential investments in or acquisitions of other companies, products, or technologies” the firm may identify in the future.

Coinbase is only the second major crypto firm to complete a junk bond offering, with MicroStrategy Inc. issuing $500 million worth of notes to fund further Bitcoin accumulation as the markets crashed in June.

Since trading as high as $342 on its opening day, Coinbase’s COIN stock last traded for $243. However, COIN is up roughly 20% since late June.

The recently bullish investor sentiment surrounding Coinbase comes in spite of the U.S. Securities and Exchange Commission (SEC) threatening to take legal action against the exchange should it launch a USDC lending product.

Prior to the SEC’s warning, the exchange had intended to launch its crypto lending product ‘Lend’ in only “a few weeks.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.