Coinbase Boosts Debt Buyback to $180 Million Amidst Credit Quality Concerns

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Key Takeaways

  • Exchange will commit $180 million to buy back its 3.625% senior notes due 2031.
  • Coinbase’s stock remains in a downtrend, down 78%

Coinbase, a leading cryptocurrency exchange, has made a substantial expansion to its debt buyback program, increasing the initial offer from $150 million to a substantial $180 million. This strategic move aims to proactively address concerns about the exchange’s credit quality and rebuild investor confidence in a volatile market.

The focus of Coinbase’s debt buyback program remains its 3.625% senior notes, which are due in 2031. Investors have until September 18th, with the offer closing at 11:59 pm Eastern Time (3:59 am UTC) on that date, to participate in the buyback initiative.

As of the latest update, Coinbase has already accepted $50 million worth of tendered notes for repurchase, while an additional $211 million in tendered notes remain pending acceptance, totaling $261 million. Investors whose 2031 notes meet Coinbase’s repurchase criteria will receive 67.5 cents on the dollar.

These 2031 notes were initially issued in September 2021 and have faced a turbulent journey. Their value plunged to as low as 46 cents on the dollar in early January, largely due to concerns stemming from Coinbase’s creditworthiness.

Coinbase’s financial performance has come under intense scrutiny recently, especially following the company’s announcement of a net loss of $430 million for the first quarter of 2022. This marked an unprecedented loss for the exchange. Simultaneously, Coinbase saw a substantial reduction in its customer count, declining from 11.4 million to 9.2 million during the same period. This prompted a significant sell-off of Coinbase’s stocks and bonds.

Nevertheless, there have been some encouraging developments for Coinbase in August. The exchange exceeded analysts’ expectations, reporting a yearly revenue loss of just 10% and significantly narrowing its net loss to $97 million.

Despite these improvements, Coinbase’s stock remains in a downtrend, down 78% from its all-time high of $353.39 recorded on November 9, 2021. This decline can be attributed to the broader cryptocurrency market downturn and ongoing litigation with the United States Securities and Exchange Commission.

In 2023, Coinbase’s stock has displayed signs of recovery, rallying by an impressive 121% year-to-date. These recent efforts to repurchase debt and fortify its financial position highlight Coinbase’s steadfast commitment to addressing investor concerns and maintaining its foothold in the dynamic cryptocurrency landscape.

In a related development, Coinbase recently acquired a minority stake in Circle Internet Financial. Interestingly, both companies have decided to dissolve their partnership in the Centre Consortium, which was responsible for issuing USD Coin, the world’s second-largest stablecoin

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Saniya Raahath
Saniya Raahath

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