Coinbase seeks to raise $1.5 billion in corporate lending frenzy


Coinbase update

Coinbase, the largest cryptocurrency exchange in the United States, is preparing to borrow $1.5 billion from bond investors this week, which shows that Wall Street is increasingly accepting this industry that is still in its infancy.

Coinbase said on Monday that it is seeking to borrow cash through two bonds, one with a 10-year maturity and the other with a 7-year maturity. According to people familiar with the matter, the transaction is led by Goldman Sachs and is scheduled for a conference call with potential investors on Monday morning.

The debt transaction took place shortly after the Securities and Exchange Commission threatened to sue Coinbase’s plan. Launch a product Called Lend, this will allow users to earn interest on the cryptocurrency they hold.

Coinbase borrowed more than $1.4 billion in convertible notes earlier this year. This is not the first time that the debt market has been used to raise cash.

However, this is the first time the company has sought to borrow from more major bond investors. If the fundraising is successful, this will be a watershed in the cryptocurrency industry and its ability to obtain traditional funding sources.

The bond transaction took place on the occasion of fierce financing in the bond market. Earnings-hungry investors bought dozens of bonds from a series of companies this month.

The bubble bond market bodes well for Coinbase’s financing, which is expected to be completed on Tuesday because the company hopes to take advantage of cheap borrowing costs.

According to a person with direct knowledge of the discussion, these bonds were initially sold to investors at a coupon rate of close to 4 percent of the 7-year bond and close to 5 percent of the 10-year bond.

In contrast, according to an index operated by Ice Data Services with an average duration of about four years, the high-yield bond market has an average yield of 3.9%.

The company stated in a press release: “This financing represents an opportunity to strengthen our already strong balance sheet with low-cost capital.”

Coinbase said it intends to use the proceeds of the transaction for general corporate purposes, including investment in product development and acquisitions.

Credit rating agency Moody’s said that the bond transaction is expected to be rated at the high end of the high-yield spectrum, close to the threshold of being considered an investment grade.

Exchange, where Publicly listed its shares In April of this year, the company announced substantial gains for the second quarter. The sharp fluctuations in the prices of major cryptocurrencies boosted trading revenue.

Net income exceeded US$2 billion, an increase of 27% from the first quarter and an increase of more than 1,000% from the second quarter of 2020. During the same period, net income increased from US$32 million to US$1.6 billion.

The company also seeks to expand its overseas operations. Coinbase reached an agreement with Mitsubishi UFJ Financial Group last month to allow Bank of Japan customers to access the exchange through their existing bank accounts.


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