Coinbase Expands Bond Buyback Program and Ventures into Crypto Loans for Institutional Clients
Crypto News – On September 5th, Coinbase made a significant announcement, revealing its decision to expand its bond buyback program from an initial allocation of $150 million to an enhanced sum of $180 million. This adjustment in the program’s scope is driven by the company’s aim to repurchase a greater portion of its 3.625% senior notes, which are set to mature in 2031.
The offer is scheduled to conclude on September 18th at 11:59 pm Eastern Time, following a somewhat tepid response from investors in its earlier iteration. Coinbase’s decision to expand the program is anticipated to invigorate investor interest and participation.
Let’s take a brief look at the previous situation regarding the bond buyback:
Initially, in early August, Coinbase had earmarked $150 million for the repurchase of its bonds. However, the level of interest from investors fell short of expectations, resulting in only $50 million worth of bonds being offered for repurchase. This somewhat lackluster response led to speculations that investors were holding onto their bonds in anticipation of future increases in their value.
At the time of the initial announcement, Coinbase had accepted $50 million worth of tendered notes for repurchase, while an additional $211 million in tendered notes remained unaccepted, bringing the total to $261 million.
Now, let’s delve into how the updated terms of the bond buyback will affect investors:
Under the revised terms, Coinbase will allocate $180 million for the bond buyback program, marking a $30 million increase from the original allocation. Investors whose 2031 notes are repurchased by the company will receive 67.5 cents on the dollar.
It’s worth noting that the 2031 notes initially had $1 billion in principal outstanding and were first issued in September 2021. These notes had previously declined to as low as 46 cents on the dollar due to concerns regarding Coinbase’s creditworthiness but are currently trading closer to the offer value.
Coinbase’s strategic adjustment to the bond buyback terms is seen as a proactive move to stimulate greater investor interest and participation. The extended offer period until September 18th provides investors with ample time to consider participating in the repurchase.
In addition to the bond buyback program, Coinbase has made headlines for other significant developments:
In response to the recent collapses of major crypto lending platforms like BlockFi and Genesis Global, Coinbase announced its decision to offer crypto loans to U.S. institutional investors. As per a filing with the U.S. Securities and Exchange Commission, clients of Coinbase Prime have already committed $57 million to this lending program.
Coinbase Prime serves as a platform facilitating trade execution and asset custody services for institutional clients. The company disclosed that institutions can now opt to lend their digital assets to the platform under standardized terms. This isn’t Coinbase’s first foray into the lending market, as it previously halted new loans through its retail-focused service, Coinbase Borrow.
In sum, Coinbase’s decision to raise the bond buyback cap to $180 million reflects a strategic effort to bolster investor participation, while its entry into the crypto lending space for institutional clients underscores the company’s commitment to adapting and expanding within the dynamic crypto market landscape.