- Coinbase said on Monday it will sell $US1.5 ($AU2) billion in bonds to fund its future development.
- The bonds are rated BB+ by S&P Global, just below investment grade.
- The company said it planned to use the capital to invest in future acquisitions and product development.
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Crypto exchange Coinbase is planning to raise $US1.5 ($AU2) billion through a bond sale in order to fund future acquisitions and investments, the company said in a press release on Monday.
The company will offer bonds of two maturities – one due in 2028 and another due in 2031.
Coinbase said it plans to use the proceeds to fund potential takeovers, to develop new technologies and products, as well as in additional investments.
“This capital raise represents an opportunity to bolster our already-strong balance sheet with low-cost capital,” Coinbase said in the release.
The senior bonds, which would be paid first if the company were to go bankrupt, will be sold in a private offering to pre-selected investors, Coinbase said.
Coinbase added that the bonds’ interest rates and redemption provisions, along with other terms, will be determined in negotiations with the initial buyers.
The bonds are rated BB+ by ratings agency S&P Global – one notch below investment grade, which implies a greater level of risk to their owners.
“Our ratings on Coinbase reflect the company’s very low leverage, strong liquidity, significant scale with a solid share of crypto assets on its platform, and strong track record of avoiding security breaches since inception,” S&P Global said on its website.
“However, the ratings are constrained by heavy reliance on transaction revenue and volatility in earnings linked to significant variation in crypto asset trading volumes. In addition, Coinbase currently has a relatively short track record operating at such high volumes and avoiding security breaches at elevated volume levels, which also weighs on the rating,” S&P Global said.
The company is the largest publicly listed cryptocurrency exchange and has benefitted from the growing adoption of digital assets, such as bitcoin, by mainstream financial institutions this year. Coinbase shares began trading on the Nasdaq in February.