Heading U.S.-based cryptocurrency exchange Coinbase has beheld tremendous demand for its junk bond offering. The company expanded the quantity of the sale by one-third from $1.5 billion to $2 billion.
As stated by Economic Times, at least $7 billion worth of orders were located in competition for equal quantities of seven and 10-year bonds, allowing interest rates of 3.375% and 3.625%, individually.
The publication quotes an anonymous source alleging the interest rates were lower than the initial quotes submitted by Coinbase. It had an influx of demand, implying buyers hold a higher opinion of the company’s creditworthiness than suspected initially by the exchange.
As stated by Bloomberg Intelligence analyst Julie Chariell, the influential demand is significant support by debt investors.
Nevertheless, the exchange’s bonds were considered one rank under investment grade. Bloomberg bond indexes registered that similar debt offerings obtain a 2.86% yield on average.
What Are Junk Bonds?
Junk bonds apply to corporate debt assigned by a company that does not have an investment-grade credit rating. Because of the reduced credit rating, junk bonds charge higher interest rates than investment-grade corporate bonds.
Coinbase published its debt present on Sept. 13, saying the funds may be applied for sustained investments in product developments and possible investments in or purchases of other companies, products, or technologies the firm may name in the future.
Coinbase is solely the second major crypto firm to create a junk bond offering. MicroStrategy Inc. declared $500 million worth of notes to further Bitcoin increase as the markets fell in June.
After trading as high as $342 on its opening day, Coinbase’s COIN stock last sold for $243. However, COIN has been up approximately 20% after late June.
The newly bullish investor sentiment encompassing Coinbase appears notwithstanding the U.S. Securities and Exchange Commission (SEC). It warned to take legal action versus the exchange should it start a USDC lending product.
Before the SEC’s notice, the exchange had planned to launch its crypto lending product ‘Lend’ in only “a few weeks.”