Coinbase Offering $1.25B Convertible Note Sale as Share Price Dips

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In Brief
  • Coinbase convertible debt deal worth $1.25 billion.

  • The notes will have a five-year maturation period.

  • Coinbase share prices dipped below $240.

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Coinbase will run a senior note private offering of $1.25 billion. The notes will have a five-year maturation period.

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Coinbase, a cryptocurrency exchange platform, announced the private offering on May 17 to select institutional investors. Senior notes are bonds that remain a safer investment for those buying but give the investor a lower rate of return. 

The statement also explained the 30-day option that buyers would have addition options with their purchase:

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“The notes will be senior, unsecured obligations of Coinbase, and will accrue interest payable semi-annually in arrears, and will mature on June 1, 2026, unless earlier repurchased, redeemed, or converted. The notes will be convertible into cash, shares of Coinbase’s Class A common stock, or a combination thereof, at Coinbase’s election.”

Coinbase’s share prices have been falling alongside most of the crypto market. Shares slipped briefly below $240 for the first time in after-hours trading on May 18. This is lower than the $250 reference price set by Nasdaq for its direct listing on April 14, when it debuted at $381.

Coinbase reported total sales of $1.8 billion, in line with the company’s expectations in April. However, it falls slightly below the $1.81 billion that analysts polled by Bloomberg expected. The company reported a net income of $771 million, which fell in the expected range of $730 million to $800 million. Although this exceeded analysts’ expectations of $762.6 million.

Coinbase might seem like one of the safer options to investors considering the decision to offer senior notes as opposed to other riskier lending options. It has also made it clear that it wants to make itself more trustworthy and the crypto market less volatile. Coinbase CFO Alesia Haas told Mad Money host Jim Cramer that the exchange is excited to work with regulators. She believes that if regulators are involved it creates an easier and more equal ecosystem that might invite more investors and other players into the space.

Cryptocurrency regulations have been coming thick and fast from governments all over the globe. The Thai government has forced all crypto exchange accounts to be opened in person. Other nations have been far harsher in their rulings. Nigeria, for example, took a big step by banning cryptocurrencies in the banking sector, though this has been falsely misconstrued into a complete crypto ban.

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After studying journalism at Rhodes University, Nicholas worked as a financial reporter and analyst, covering a broad range of topics from logistics, to renewable energy, to ICT. Nicholas became fascinated with the ever-evolving world of technology. He is now a crypto asset journalist.

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