Coinbase, the largest cryptocurrency exchange in the United States, has offered to buy back some of its $1 billion bonds from investors. The crypto company intends to repurchase up to 15% ($150 million) of the $1 billion bonds at a premium price.

Coinbase Offers “Special” $30 Premium For Early Sellers

In an announcement dated August 7, 2023, Coinbase has commenced purchasing up to $150 million of its $1 billion bonds set to mature in 2031. The company’s “tender offer,” which will expire on September 1, is specifically designed to reward early participants.

According to the news post, investors who validly tender and sell their bonds before August 18, 2023, will receive $645 for every $1,000 of the bond’s face value. This represents 64.5 cents on the dollar.

Meanwhile, investors who wish to participate in the buyback offer after August 18 but before the expiration date will receive $615 for every $1,000 of the bond’s face value, translating to 61.5 cents on the dollar.

It is worth noting that the entire buyback offer is at a premium as both offer prices are above the unchanged price of the bond as of August 4, which is roughly 60 cents on the dollar, according to Business Insider data.

The bonds in this offer are just one of Coinbase’s three outstanding debts, and Citigroup Global Inc. Coinbase will manage them as its two other bonds are set for maturity in 2026 and 2028, respectively.

Bond buybacks are not a strange phenomenon in the global financial landscape, as they can enable companies to lower their debt loads and boost their overall financial positions.

Coinbase Bets On Itself After Strong Q2 Performance?

This bonds buyback initiative comes after Coinbase reported a total revenue of $708 million for the second quarter of 2023. 

Although Coinbase’s revenue experienced a quarter-on-quarter  9% decline, the latest figure is still considered positive, as the company’s revenue for Q2 exceeded initial projections of about $662 million.

The lower earnings estimates came primarily due to Coinbase’s regulatory challenges in the second quarter. In June, the United States Securities and Exchange Commission (SEC) filed a lawsuit against the cryptocurrency exchange for allegedly violating securities laws.

The quarterly report also revealed that the exchange recorded a total trading volume of about $92 billion in 2023 Q2. Institutional trading tallied $78 billion out of this value, while retail trading accounted for the remaining $14 billion.

In reaction to the report, Coinbase CEO and founder Brian Armstrong acknowledged the challenges faced by the exchange in the second quarter. However, he also expressed his belief about the company’s position “to build the future of the crypto economy and help drive regulatory clarity.”