- U.S.’s leading crypto exchange, Coinbase announced that it is topping its debt buyback from $150 million to $180 million.
- The offer will expire on September 18 at 11:59 pm Eastern Time (or 3:59 am UTC).
- This has excited the market with $211 million additional bond value being offered by the investors.
Coinbase has pushed back the expiration date of the tender offer from the original deadline of September 1st to September 18th, just before midnight. This comes as good news to noteholders who had not made a decision whether to participate or not participate in the offer. Coinbase is willing to buy back a larger number of its outstanding Notes than it unveiled previously.
The the US-based crypto trading platform Coinbase announced that it is topping its debt buyback from $150 million previously, to now at $180 million. This will go towards the repurchase of its 3.625 % senior notes that were due to mature in 2031.
Coinbase is expected to accept payment and make payment on Sept. 6, 2023, with regards to all the notes tendered after 5:00 PM ET on Aug. 18, 2023, but before 11:59 PM ET on Sept. 1, 2023.
The initial bond buyback program had a limit of $150 million, this was not well received by the market with only $50 million in bonds being processed forcing Coinbase to increase the total amount it is willing to buy back the bonds by 20%. It could be argued that the investors were holding back the bonds due to a speculative high appreciation in the future.
The increase in the buyback limit has excited the crypto market because, in the days following the announcements, investors offered $211 million in bonds. So far the total bonds that have been offered are worth $261 million. According to Coinbase, those who tendered their notes at or prior to the interim expiration time are eligible to receive $6.75 cents on the dollar for the principal amount of the notes tendered.
The 2031 notes had $1 billion in principal outstanding and were issued in September 2021, but due to investor’s apprehension on Coin base’s creditworthiness, the value dropped to as low as 46 cents in January.
Understanding Buy Back Program
Just like in a traditional market, a bond buyback is a situation where a bond issuer may be able to retire a portion of their existing bond indebtedness at a discount. A bond buyback can be described as an efficient use of the issuer’s excess cash. It is a process in which a corporation repurchases its own bonds on the open market. This technique reduces debt burden, improves financial health and has the potential to improve the value of its outstanding bonds.
After Coinbase went public in 2021 and became a publicly listed company, it began buying back its bonds.
In addition to becoming a publicly listed company in 2021, Coinbase has also entered the lending space; to offer crypto loans to US institutional investors. This is a move seen as capitalizing on the vacuum left after the collapse of top crypto lenders like BlockFi and Genesis Global. It can also be argued that the largest cryptocurrency exchange in the United States by trading volume could be looking to diversify its income. In conclusion, the crypto company is currently exciting the market and there is a possibility of the value of the outstanding bond going up in the short run.