The crypto exchange Coinbase is offering to buy back up to $150 million worth of its outstanding junk bonds.
Junk Bonds, or high-yield bonds, are issued by companies aiming to raise capital quickly. The Federal Reserve (Fed) interest rate is almost at a 22-year-high, so the companies’ refinancing is expensive.
Coinbase Issues Deadline to Buy Back Junk Bonds
According to Bloomberg, Coinbase is open to buying back its junk bonds till Sep 1. Until this deadline, the exchange is willing to repay up to $150 million of its debt from 3.625% notes that expire on October 2031. Citigroup will handle Coinbase’s junk bond buybacks.
For every $1,000, investors can cash out the amount in the range of $615 to $645. The particular debt is trading around $0.62 on the bond market. This year’s Bitcoin rally helped the price recovery of the bond, which made a low of around $0.52.
On July 26, the US Fed raised interest rates by another 25 basis points, pushing them to a 22-year-high. With high-interest rates, the debt becomes expensive for companies. Hence, companies in the US have started buying back their debts.
Coinbase Revenue Beats Estimates
The company released its quarterly report for the second quarter of 2023 last Friday. It reported a total revenue of $708 million, beating estimates of $631 million.
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However, Q2 total revenue is down by about 8% compared to Q1. Coinbase believes the revenue has declined due to a period of low volatility in the market.
Coinbase stock was consolidating between $85 to $50 for around four months. However, in July, the stock broke out from consolidation with strong volume. In Tuesday’s pre-markets, the Coinbase stock was trading at $85.23, testing the support of the highs of the previous consolidation zone.
Coinbase is currently engaged in a legal battle with the US Securities and Exchange Commission (SEC). But some investors are bullish as the company was named as a surveillance-sharing partner for BlackRock’s spot Bitcoin exchange-traded fund (ETF), which is currently under consideration by the SEC.
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