Coinbase increased the size of the debt offer to $2 billion. Bitcoin exchange Coinbase increased the volume of placement of two issues of senior bonds from $1.5 billion to $2 billion. The rating agency Moody’s classified them as “junk”. According to the press release, the company has expanded its offer of debt securities due to market demand.
On September 13, 2021, Coinbase announced the placement of bonds. With a pre-emptive right of redemption in 2028 and 2031 in the amount of $1.5 billion.
The cost of each issue will now be $1 billion. Moreover, 3.375% per annum will be paid for securities maturing in 2028, and 3.625% for notes in 2031.
“Coinbase intends to use the net proceeds from the offer for general corporate purposes. Which include the development of new products. As well as potential investments or acquisitions of other companies, products or technologies,” the statement said. It is expected that the placement will be closed on September 17.
Against the background of the issue of Coinbase debt securities, Moody’s assigned the company’s bonds a Ba1 rating. Thus, this rating indicates a non-investment or “junk” level (junk bonds).
In its assessment, Moody’s referred to the exchange’s strong dependence on cryptocurrency prices and trading volumes, high competition in the industry, changes in regulation, as well as cybersecurity risks.
Threat of prosecution from SEC
Earlier, Coinbase faced the threat of prosecution from the US Securities and Exchange Commission (SEC) in the case of launching savings accounts. Coinbase CEO Brian Armstrong wrote on Twitter that “recently SEC has been behaving inadequately”, before launching into a 21 post thread delineating the SEC’s dealings with the company.
Recall that the head of the SEC, Gary Gensler, believes that many assets in the listing of crypto exchanges are unregistered securities and the regulator should fight this. “The tone is more negative than his previous remarks,” commented Caitlin Long, founder and CEO of Avanti cryptocurrency bank.