Coinbase junk bonds plummet due to market turmoil and creditors’ concerns

• Blockchain Council
• September 07, 2022

Coinbase’s junk bonds are plummeting in value, owing to poor first-quarter performance and concerns about what would happen if the company goes bankrupt.

According to bond trading data from Trace Bonds, Coinbase’s junk offerings tumbled to 17% and 5.2% since its first-quarter report revealed on May 10. This means that the bonds’ current values are at $63 and $62.31, respectively. In fact, there has been a decrease of 20% and 19% respectively since the beginning of the month.

10y coinbase bonds trading at 63 cents on the dollar pic.twitter.com/fqmKmiXk5E

— state (@statelayer) May 12, 2022

However, according to the CEO of Coinbase, Brian Armstrong,” there has been no change in Coinbase in the past week. The firm is still the same as yesterday and stands strong as a year ago. If the bank statements are analyzed, we are in better circumstances.”

Junk bonds are debt securities issued by corporations having credit ratings below investment grade. Companies utilize the junk-bond offering to borrow a certain amount of money, then set a maturity date (return date) and interest rate to pay on top of the borrowed cash.

Due to their lower credit rating, junk bonds have a higher interest rate than investment-grade corporate bonds. Coinbase raised around $2 billion in September with two equally spaced offers of 3.375 percent over seven years and 3.625 percent over ten years, respectively.

Both junk bond offers started out at $100 each and have been slowly declining since then. However, the larger-than-usual loss this month implies that investors are losing faith in Coinbase in the future.

Coinbase stock (COIN) has also plunged 20% following the release of its Q1 report, despite the fact that market sentiment was already pessimistic, with the price having lost 50% since the beginning of May.

Coinbase allows investors to trade and exchange over 100 types of cryptocurrencies, including Ethereum, Bitcoin, Dogecoin, etc. Coinbase is one of the largest cryptocurrency exchange and trading platform in terms of trading volumes, with approximately 89 million users and $278 billion worth of assets. 

On Coinbase, which has users from over 100 countries, customers transact $547 billion per quarter. In addition, Coinbase manages a vibrant bitcoin ecosystem with over 11,000 financial institutions.

Apart from the web, Coinbase also supports Android and iOS mobile devices. A novice with basic computing skills can use Coinbase, thanks to its simplicity. You’ll have a similar experience if you’ve ever traded stocks using an online brokerage.

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