Ledn, a cryptocurrency lending platform, has successfully executed a groundbreaking asset-backed securities (ABS) transaction, raising $188 million through bonds secured by over 5,400 bitcoin-collateralized consumer loans. This marks a significant development in the crypto credit market, as it is the first ABS deal of its kind.
The bonds are backed by a diverse pool of loans, each supported by borrowers’ bitcoin holdings. These loans carry a weighted average interest rate of 11.8%, providing a steady cash flow for investors. The transaction consists of two tranches, with the investment-grade portion priced at 335 basis points above the benchmark rate. Jefferies acted as the sole structuring agent and bookrunner for this deal.
Bitcoin’s inherent volatility has been a focal point for investors, especially as the cryptocurrency experienced a notable decline of up to 50% in value over the past four months, dropping to a low of $60,000. However, the structure of this ABS transaction incorporates automated liquidation mechanisms that activate when specific thresholds are breached. This feature aims to safeguard investors against sharp market downturns, providing an additional layer of security.
Crypto firm Ledn sells Bitcoin-backed bonds in ABS market first
First ever deal of its kind in asset-backed debt
Secured by pool of 5,400 Bitcoin-collateralized loans that consumers took from Ledn at weighted avg rate of 11.8%
Investment grade tranche priced at +335bps pic.twitter.com/Rx3944uGys
In the broader context of the cryptocurrency market, recent trends indicate a cautious approach among institutional investors. On February 18, U.S.-listed bitcoin, ether, and XRP spot exchange-traded funds (ETFs) experienced significant net outflows, suggesting a reduction in exposure to these assets. Specifically, bitcoin spot ETFs saw a withdrawal of $133.3 million, while ether products lost $41.8 million in a single day. Despite this, Solana spot ETFs reported $2.4 million in net inflows, indicating a selective rotation within the crypto space rather than a complete exit from digital assets amid ongoing macroeconomic uncertainties.
Ledn has completed a pioneering asset-backed securities transaction, raising $188 million through bitcoin-collateralized loans. This innovative move highlights the evolving landscape of crypto finance, even as market volatility persists.