Coinbase, the major US-based cryptocurrency exchange, has seen huge demand for its junk bond offering, and the company has increased the size of the sale by a third from $ 1.5 billion to $ 2. billion.
According to the Economic Times, at least $ 7 billion by value of the orders were placed in competition for equal amounts of bonds to seven and ten years, offering interest rates of 3.375% and 3.625%, respectively.
The post cites an anonymous source claiming that interest rates were cheaper than the initial quotes offered by Coinbase, and the influx of demand suggests that buyers have a higher opinion of the company’s creditworthiness than the one initially suspected. exchange.
“The strong demand is clearly great support from debt investors,” said Julie Chariell, an analyst at Bloomberg Intelligence.
However, bonds on the exchange were rated a rank below investment grade, and Bloomberg bond indices indicate that similar debt offerings return 2.86% 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 carry higher interest rates than investment grade corporate bonds.
Coinbase announced its debt offering on September 13, stating that the funds can be used for “continued investments in product development” and “potential investments or acquisitions of other companies, products or technologies” that the company may identify in the future.
Coinbase is only the second major crypto firm to complete a junk bond offering, with MicroStrategy Inc. issue $ 500 million worth of bills to fund a further accumulation of Bitcoin as the markets crashed in June.
Since trading as high as $ 342 on its opening day, Coinbase’s COIN shares last traded for $ 243. However, COIN is up about 20% since the end of June.
Recent bullish investor sentiment around Coinbase comes despite the U.S. Securities and Exchange Commission (SEC) threatening legal action against the exchange should it launch a USDC loan product.
Before the SEC’s warning, the exchange intended to launch its ‘Lend’ crypto loan product in just “a few weeks.”