October 30, 2021 8:00 AM

Coinbase Successfully Debuts In The Debt

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In mid-September, the largest US cryptocurrency exchange Coinbase (BB + / Ba1 / -) debuted on the public debt market. Initially, the issuer planned to place two issues of Eurobonds with maturity in 2028 and in 2031 with a total volume of $ 1.5 billion. However, faced with high demand from investors, the company decided to increase the supply to $ 2 billion. Thus, each issue accounted for $ 1 bln. For securities maturing in 2028, the coupon was set at 3.375%, while for longer securities maturing in 2031, the coupon rate was 3.625%. The aggregate demand for Coinbase Eurobonds amounted to an impressive $ 7.5 billion, which indicates a high interest in debt in companies related to the crypto universe. The company's bonds received credit ratings one notch below investment grade from both S&P and Moody's.

YTM

4%

RISK

BB+ / Ba1/ -

DURATION

6.3

Amid growing interest in cryptocurrencies, Coinbase posted excellent Q2 results. The company's quarterly revenue jumped to $ 2 billion from $ 178 million a year earlier and $ 1.6 billion in the first three months of this year. Market consensus predicted an average revenue of $ 1.8 billion. The real surprise for the market was net profit, which increased 50 times to $ 1.6 billion from $ 32 million in the same period last year. Adjusted earnings per share soared to $ 7.76 versus the market consensus of $ 2.48. In terms of credit metrics, Coinbase had negative net debt in Q2. Among the two Eurobond issues, we prefer bonds with maturity in 2028 (ISIN - US19260QAC15), which currently offer a dollar yield of 4% with a duration of 6.3 years.

Coinbase Global is a regulated cryptocurrency company that provides customers around the world with a platform for buying, selling, transferring, and storing digital assets. The Company offers a variety of products and services that enable individuals, businesses, and developers to participate in the crypto economy.