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Coinbase increases its junk-bond offering to $2 billion, after a swarm of investors

Coinbase, the largest cryptocurrency exchange in the United States, increases the amount of its junk bond offering by one-third. Going from $1.5 billion to $2 billion, due to overwhelming demand.

Economic Times and Bloomberg Report

According to the Economic Times, the competition had at least $7 billion in orders for equal quantities of seven and ten-year bonds with interest rates of 3.375 percent and 3.625 percent.

An unidentified source claims that the interest rates were lower than the original quotations by Coinbase. Therefore, implying that purchasers had a higher impression of the company’s creditworthiness than the exchange previously thought.

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

On the other hand, the exchange’s bonds were rated one notch below investment grade. Bloomberg bond indexes suggesting that similar debt issues fetch an average yield of 2.86 percent.

Junk bonds are corporate bonds that companies issue with a credit rating that is not investment-grade. Junk bonds have a higher interest rate than investment-grade corporate bonds because of their lower credit rating.

Coinbase Launches Its Debt Offering

On Sept. 13, Coinbase launched its debt offering, noting that they will use the cash for “continued product development” as well as “potential investments in or acquisitions of other companies, products, or technologies” that the company may recognize in the future.

Coinbase is just the second big cryptocurrency company to issue a junk bond. With MicroStrategy Inc. releasing $500 million in notes to fund more Bitcoin accumulation after the markets plummeted in June.

Coinbase’s COIN shares recently traded at $243, down from a high of $342 on its first day. COIN, on the other hand, has increased by about 20% since late June.

Despite the US Securities and Exchange Commission (SEC) warning to take legal action against Coinbase if it launches a USDC loan product, the market mood has suddenly turned favourable.

The exchange had planned to introduce its crypto lending service ‘Lend’ in only “a few weeks” before the SEC issued its warning.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.