Coinbase Increases and Extends Bond Buyback Program with Enhanced Terms – Here’s What You Need to Know

On September 5 Coinbase revealed that it would expand its bond buyback program from $150 million to $180 million. This adjustment comes as the company strives to repurchase more of its 3.625% senior notes due in 2031. 

The offer is slated to close on September 18 at 11:59 pm Eastern Time and follows a previous lukewarm response from investors. The adjustment is expected to increase investor participation.

A Brief Look at the Previous Bond Buyback Situation

Initially, Coinbase had set aside $150 million to buy back its bonds in early August. The interest from investors was not as strong as expected, hovewer, with only $50 million in bonds offered for repurchase. This tepid response led to speculations that investors were holding on to their bonds in the expectation of future value growth.

At the time of the initial announcement, Coinbase had accepted $50 million worth of tendered notes for repurchase. An additional $211 million in tendered notes remained unaccepted, making the total amount $261 million.

How the Updated Bond Buyback Terms Affect Investors

With the new terms, Coinbase will allocate $180 million for the bond buyback, a $30 million increase from the original amount. Investors whose 2031 notes are bought by the company will receive 67.5 cents on the dollar. 

The 2031 notes initially had $1 billion in principal outstanding and were first issued in September 2021. They had previously dropped to as low as 46 cents on the dollar due to concerns about Coinbase’s creditworthiness but are now trading closer to the offer value.

Coinbase seems to have read the room and acted accordingly. The change in terms is expected to heighten investor interest and participation, as the company has made the bond buyback more attractive. However, it’s not just the bond buyback that’s making news.

Other Developments at Coinbase

In addition to modifying the bond buyback program, Coinbase also announced its decision to offer crypto loans to U.S. institutional investors. This comes in the wake of the collapse of major crypto lenders like BlockFi and Genesis Global. According to a filing with the U.S. Securities and Exchange Commission, clients of Coinbase Prime have already committed $57 million to the lending program.

Coinbase Prime is a platform that helps with trade execution and asset custody for institutions. The company released a statement on Tuesday, explaining that institutions can now choose to lend their digital assets to the platform under standardized terms. 

This isn’t the first time Coinbase has ventured into the lending market. Previously, the company had paused issuing new loans through a retail-focused service known as Coinbase Borrow.

Coinbase’s decision to increase the bond buyback cap to $180 million seems to be a strategic move to encourage more investor participation. The offer will remain open until September 18, giving investors enough time to decide whether they want to take part in the repurchase. 

Alongside this, the company is also expanding its services by offering crypto loans to institutional clients. Both moves reflect Coinbase’s ongoing efforts to adapt and grow in the fast-paced crypto market.