Crypto lending firm Ledn Incorporated has sold $188 million worth of bonds secured by Bitcoin-linked loans, marking the first such deal in the asset-backed debt market. The bonds are divided into two tranches, one of which received an investment-grade rating and was priced at 335 basis points above the benchmark rate. Jefferies Financial Group managed the deal’s structuring and bookrunning. These bonds are secured by a pool of over 5,400 consumer loans issued by Ledn, where borrowers have pledged their Bitcoin assets as collateral. The average interest rate on these loans is approximately 11.8 percent. Bitcoin’s price volatility poses a significant risk, as sudden declines could complicate loan repayments. According to an S&P Global Ratings report, Ledn employs an algorithmic system that sells Bitcoin collateral to ensure loan repayment when default risk arises. In early February, a sharp drop in Bitcoin’s price forced Ledn to liquidate a large portion of the allocated loans, increasing cash reserves while maintaining total collateral near $200 million. The report assesses potential risks considering consumer default trends, recovery rates, and market fluctuations. Since Ledn primarily issues loans backed by Bitcoin collateral, conventional loan performance metrics are limited in relevance. The company plans to begin cash interest payments on renewed loans starting in 2027, which is expected to alleviate liquidity pressures over time. Despite a recent modest rebound, Bitcoin’s current price of about $66,000 remains roughly 46 percent below its October peak.
Source: bitcoinmagazine
