Coinbase, the premier digital asset exchange in the United States, has revealed its intent to repurchase some of its $1 billion corporate debt.
The company aims to acquire up to $150 million of its bond, set to mature in 2031. This decision comes after a favorable second-quarter earnings report, even as it faces scrutiny from the Securities and Exchange Commission (SEC).
An official statement from Coinbase, dated August 7, mentioned that this offer would last until September 1, 2023. Citigroup’s brokerage division will oversee the buyback, assisting Coinbase in its efforts to cut down on interest costs.
Being listed on Nasdaq, Coinbase will kick off the buyback scheme, offering a premium across various tiers, segmented by time periods and quantities.
Business Insider data indicates that the current bond’s untouched price is at 60 cents for every dollar.
Investors are encouraged to offer their bonds by August 18, with an incentive of $645 per $1000 of bonds, translating to 64.5 cents on the dollar. Additionally, these early bondholders will receive a premium of $30 for their early tender.
For those who choose to sell between August 18 and September 1, they will still get a premium: $615 per $1000 of bonds, or 61.5 cents to the dollar.
Following Coinbase’s positive financial results, contrasting starkly with prior quarters, the market is buzzing with speculations about future trends.
In Q2 2023, Coinbase managed to limit its net loss to $97 million, a significant improvement from the massive $1.1 billion loss seen in Q2 2022. However, their revenue did witness a 17% drop.
Can it ignite the bull market?
The cryptocurrency market has remained relatively stagnant for the past few months. However, this year marked a significant rebound after the tumultuous events of 2022, such as the collapse of Terra and the notable downfall of FTX.
With institutional investors making a comeback, there’s an expected influx of liquidity that could bolster vital areas within decentralized finance (DeFi).
These institutional players are increasingly showing interest, particularly in light of a potential SEC green light for a spot Bitcoin (BTC) ETF in the U.S.
Bitcoin’s price recently shot up to $31,000, a positive sign that also uplifted other digital assets. This surge is further buoyed by multiple prominent companies submitting their applications for a spot ETF to the SEC.
One of the key contributors to Coinbase’s enhanced performance was its selection by leading companies as a Surveillance Sharing Partner (SSA) for their spot BTC ETF applications.
During Q2, the company stated, “We continued our forward momentum towards our ambitious objectives. Among these advances, we widened the reach of our derivatives products to international customers and have been chosen by numerous premier asset managers to support the foundational infrastructure of their proposed spot Bitcoin ETFs.”
Although market predictions lean towards a positive trajectory, the absence of clear regulations surrounding digital assets in various regions remains a significant barrier.