Coinbase Expands Bond Buyback Program to $180 Million
On September 5, Coinbase announced its decision to increase its bond buyback program from $150 million to $180 million. The company aims to repurchase more of its 3.625% senior notes due in 2031.
The offer will close on September 18 at 11:59 pm Eastern Time. This adjustment comes after a lukewarm response from investors and is expected to attract increased investor participation.
A Brief Look at the Previous Bond Buyback Situation
In early August, Coinbase initially allocated $150 million to repurchase its bonds. However, the response from investors was not as strong as anticipated, with only $50 million in bonds offered for repurchase. Speculations arose that investors were holding onto their bonds in hopes of future value growth.
At the time of the initial announcement, Coinbase had already accepted $50 million worth of tendered notes for repurchase. An additional $211 million in tendered notes remained unaccepted, bringing the total amount to $261 million.
How the Updated Bond Buyback Terms Affect Investors
Under the new terms, Coinbase will allocate $180 million for the bond buyback, a $30 million increase. Investors whose 2031 notes are repurchased by the company will receive 67.5 cents on the dollar.
The 2031 notes were initially issued in September 2021 with $1 billion in principal outstanding. Concerns about Coinbase’s creditworthiness caused their value to drop as low as 46 cents on the dollar but has now risen closer to the offer value.
Coinbase’s adjustment to the bond buyback terms aims to generate heightened investor interest and participation. However, the company’s recent developments extend beyond the bond buyback program.
Other Developments at Coinbase
In addition to modifying the bond buyback program, Coinbase has also introduced crypto loans for U.S. institutional investors. This move follows the collapse of major crypto lenders like BlockFi and Genesis Global. Coinbase Prime, a platform aiding trade execution and asset custody for institutions, has already received commitments of $57 million for the lending program.
Coinbase’s decision to increase the bond buyback cap to $180 million strategically encourages investor participation. The offer remains open until September 18, allowing investors ample time to decide whether to participate. Additionally, the company’s expansion into crypto loans for institutional clients demonstrates its efforts to adapt and grow in the fast-paced crypto market.
Hot Take
Coinbase’s adjustment to its bond buyback program and entry into the crypto lending market showcase its determination to remain competitive and innovative. By expanding its services and making the bond buyback more appealing, Coinbase is actively engaging with investors and adapting to market demands. These strategic moves position Coinbase for continued success in the evolving cryptocurrency landscape.
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