Coinbase Global Inc. has introduced a proposal to repurchase a portion of its $1 billion bonds, backed by a premium from its investors. The company that operates a cryptocurrency exchange has formally announced its intention to buy back up to $150 million from its $1 billion bond issuance, which has a maturity date set for the year 2031.
Companies engage in bond buybacks, where they repurchase their own shares or bonds from the market or existing investors. This practice offers advantages for both the companies and the investors involved. According to a recent statement, Coinbase is making an offer to redeem a maximum of $150 million of its 3.625% notes due to mature in October 2031. Investors who decide to take part in this offering will have the chance to receive an amount ranging between $615 and $645 for each $1,000 of the principal amount. This corresponds to 64.5 cents per dollar. Moreover, this amount incorporates an early-tender premium of $30.
The offer is open until September 1, at 11:59 p.m. New York time. As the offer approaches its deadline, Coinbase will provide $615 for every $1,000 of the bond’s face value, equivalent to 61.5 cents on the dollar.
Additionally, Coinbase has enlisted Citigroup Global Markets to oversee the administration of the buyback proposal. The bonds included in this offer constitute only one of three outstanding debts. Alongside this, the exchange also holds two other bonds maturing in 2026 and 2028, which collectively amount to over $1 billion in value.
Understanding the Premium: Why Coinbase’s Bond Buyback Offer Stands Out
The offer for repurchasing the bonds is being presented at a higher expense, as the proposed buying rates for both bonds surpass the recent data on the bonds. This data indicated a value of about 60 cents for each dollar. The debt that Coinbase intends to settle had a valuation of 62 cents for each dollar as determined by the bond market. This demonstrates an increase from its previous lowest point of 52 cents, which was recorded in November 2022.
This slight premium emerges due to Coinbase’s overachievement in the second quarter, surpassing the predictions of financial experts. The company reported earnings amounting to $708 million and an adjusted loss of $0.42 per share. This performance outperformed analyst projections, which had anticipated earnings of $628 million and a loss of $0.76 per share. Furthermore, the current value of Bitcoin is approaching its highest point in 2023. These combined factors could have further influenced the company’s decision to propose this bond buyback.