According to Bloomberg, cryptocurrency lending firm Ledn Inc. has issued asset-backed securities (ABS) collateralized by Bitcoin, totaling $188 million (approximately 2.6 trillion Korean won). Bloomberg states that this is the first transaction involving Bitcoin-backed bonds in the ABS market.
Structure and Issuance Conditions
Citing multiple sources familiar with the matter, Bloomberg reports that the transaction consists of two bond tiers, with the investment-grade tier priced at a spread of 335 basis points over the benchmark rate. Jefferies Financial Group Inc. served as the exclusive structuring agent and bookrunner.
Collateral Asset Composition
According to a S&P Global Ratings report cited by Bloomberg, the bonds are backed by a pool of over 5,400 loans where consumers borrowed from Ledn using their Bitcoin as collateral. The weighted average interest rate on these loans is 11.8% annually.
Volatility Risk and Safety Measures
The sharp volatility of Bitcoin prices is a key risk factor for this transaction. Bloomberg reports that S&P states Ledn has a structure that allows for the immediate sale of collateralized Bitcoin through an algorithm-driven automatic liquidation system in the event of loan default, using the proceeds to repay the loan. This mechanism helps ABS investors to some extent mitigate the risk of price crashes.
Bloomberg reports that earlier this month, when Bitcoin plummeted about 50% from its October high, Ledn reportedly liquidated a significant portion of loans in its securitized portfolio. Bloomberg adds that although Bitcoin has rebounded slightly, it is still down about 46% from the October high, with the current price around $66,484.
Bloomberg states that this transaction marks the official expansion of securitization technology from traditional financial markets into the cryptocurrency lending sector. It remains to be seen whether similar structured cryptocurrency-backed ABS issuances will continue in the future.
Disclaimer: The information on this page may come from third parties and does not represent the views or opinions of Gate. The content displayed on this page is for reference only and does not constitute any financial, investment, or legal advice. Gate does not guarantee the accuracy or completeness of the information and shall not be liable for any losses arising from the use of this information. Virtual asset investments carry high risks and are subject to significant price volatility. You may lose all of your invested principal. Please fully understand the relevant risks and make prudent decisions based on your own financial situation and risk tolerance. For details, please refer to
Disclaimer.
Related Articles
Bitcoin Enters Best Buy Zone Since 2022, Fourth Parabolic Bitcoin Move Expected
Bitcoin enters best buy zone since 2022.
This leads experts to expect the fourth parabolic Bitcoin move to play out soon.
The price of BTC could hit $190,000 by 2030, presenting a perfect time to accumulate now
The crypto community continues to watch the crypto market closely as the pri
CryptoNewsLand37m ago
Bitcoin ETFs 'will be larger' than gold ETFs: Analyst
Spot Bitcoin exchange-traded funds (ETFs) could surpass gold ETFs in total assets under management (AUM) as investor demand expands beyond the traditional “digital gold” narrative, according to ETF analyst James Seyffart.
“There are just more use cases of why somebody would put a Bitcoin ETF in a p
Cointelegraph1h ago
Bitcoin's $1.3 trillion security race: Key initiatives aimed at quantum-proofing the world's largest blockchain
Quantum computers capable of breaking the Bitcoin blockchain do not exist today. Developers, however, are already considering a wave of upgrades to build defenses against the potential threat, and rightfully so, as the threat is no longer hypothetical.
This week, Google published research
CoinDesk2h ago
