Subsequent to their financial performance in the second quarter, Coinbase initiated a bond buyback, proposing to acquire a segment of the $1 billion bond from investors with a premium.

In their announcement, the company stated that it will repurchase up to $150 million of the $1 billion bond, which matures in 2031.

Individuals who participate in the buyback offer and sell their bonds before August 18th will receive $645 for every $1,000 of the bond, which equates to 64.5 cents per dollar. This amount includes a $30 special early tender premium.

Bonds sold by bondholders after August 18 and before the offer’s expiration on September 1 will receive a payment of $615 for every $1,000 of their bonds. According to the analysis, the aggregate buyback offer is at a high level because both offer prices are higher than the unaffected bond price.

In the second quarter, Coinbase reported revenue of $708 million, which was more than the anticipated $628 million. Additionally, they mentioned that the 0.42 cent earnings per share above analyst expectations.The surge in Bitcoin prices during 2023 could also exert an influence on the buyback offer. 

For the management of the bond buyback offer, Coinbase has joined forces with Citigroup Global Markets. One of the company’s three existing obligations, the bonds included in the tender, has a maturity date of 2031. Additionally, Coinbase owns two additional bonds that will mature in 2026 and 2028 and have a combined value of more than $1 billion.

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What is a Buyback?

Companies announce buybacks to repurchase their own shares or bonds from the market or existing investors. Bond buybacks are beneficial for both the company and the investors. For companies, repurchasing bonds leads to a reduction in interest expenses and a decrease in debt burden. For investors, it offers early liquidity and opportunities for high-yielding investments.

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