The first U.S. bitcoin-backed municipal bond; Moody’s gives it a junk bond rating

The New Hampshire Business Finance Authority (New Hampshire Business Finance Authority) plans to issue municipal bonds with a total value of $100 million, backed by bitcoin, which have received a “Ba2” junk bond rating from Moody’s Investors Service, with the goal of introducing an emerging new source of funding for local institutions through digital assets.

Municipal bonds backed by bitcoin

According to a report by Bloomberg, the municipal bonds that the New Hampshire Business Finance Authority plans to issue under this program rely mainly on the returns generated by the bitcoin collateral to make principal and interest payments. In the structure, if the price of bitcoin rises, bondholders will be eligible to receive additional upside compensation; conversely, if the price of bitcoin falls below a specified threshold, the trustee will trigger a liquidation mechanism to force the sale of assets to ensure full payment to bondholders.

Moody’s gives a Ba2 rating

The product has received a “Ba2” rating from Moody’s Investors Service. In Moody’s credit rating framework, bonds are divided into “investment grade” and “non-investment grade” (commonly referred to as high-yield bonds or junk bonds). The minimum threshold for investment grade is a Baa3 rating, while Ba2 falls within the non-investment-grade category, two notches below investment grade. Ba ratings (covering Ba1, Ba2, Ba3) are a relatively higher credit-quality segment within non-investment grade, which Moody’s defines as having a “speculative character” and substantial credit risk.

Moody’s report specifically emphasizes that this bond does not use public funds from the state of New Hampshire or any of its jurisdictions. The issuer also has no taxing authority to cover any payment shortfall, ensuring that taxpayers are not exposed to potential financial risks.

BitGo and CleanSpark are involved

This innovative financial product involves collaboration among multiple specialized institutions to keep operations running. Wave Digital Assets LLC, a digital asset management company, will handle day-to-day transaction administrative management, while BitGo Bank & Trust will act as the asset custodian, ensuring the security and compliance of the crypto assets. In addition, CleanSpark, a bitcoin mining and data center company, will serve as the borrowing party and provide bitcoin as collateral, forming the basis for bond payments. New Hampshire Governor Kelly Ayotte has expressed support for this, saying it will help position the state as a leader in digital finance while maintaining fiscal discipline at the state level.

Although the bond structure includes liquidation protection mechanisms, bitcoin’s high volatility remains the core market risk. Data shows that after bitcoin reached an all-time high of about $126K in October 2025, it has fallen by nearly 50% to date. By comparison, the Bloomberg-compiled non-investment-grade (high-yield) municipal bond index has still delivered a positive return of 1.54% to investors over the same period. This highlights the significant differences in risk-return characteristics between traditional defensive assets and cryptocurrencies. The non-investment-grade ratings assigned by traditional credit rating agencies also reflect a risk discount assessment for the severe price volatility of emerging assets.

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