America’s first case! New Hampshire issues “Bitcoin-backed bonds,” and Moody’s rates them “Ba2” junk-grade

Cryptocurrencies are officially making inroads into the U.S. public bond market. According to a report by Bloomberg, the New Hampshire Business Finance Authority (NHBFA) is set to issue $100 million in municipal bonds backed by Bitcoin, and has already received an initial rating from Moody’s, the global credit rating powerhouse. Moody’s has assigned the bond a “Ba2” rating, which is two notches below “Investment Grade,” placing it in “junk” territory. The endorsement from a credit rating agency brings this bold financial innovation one step closer to reality. As the issuer’s new channel, the New Hampshire Business Finance Authority plans to issue two series of taxable Bitcoin-backed notes totaling $100 million, but the official issuance date has not been announced yet. The repayment funds for these bonds will come from liquidation proceeds of the Bitcoin collateral. If the price of Bitcoin rises, bondholders will receive additional interest payments. Conversely, if the price of Bitcoin falls below a specified threshold, the trust mechanism will also trigger a liquidation process to ensure creditors receive full repayment. In addressing the capital-safety issue that the public cares about most, Moody’s specifically emphasized in its report that New Hampshire’s government and its affiliated agencies’ public funds will absolutely not be used to pay any amounts related to these bonds, and the issuer does not have the authority to use taxation to cover any funding shortfalls. In other words, although these bonds are issued under the banner of a state government agency, the state government does not provide credit backing. In terms of financial structure, it is more like “conduit financing” or project financing: government agencies only serve as the issuance platform, while the real risk is borne by investors. Even so, this setup has still succeeded in pushing Bitcoin into a realm that is exceptionally rare within the financial system— the first bond in the U.S. issued through public channels and backed by ratings from an authoritative institution. Even if “Ba2” is in the speculative grade category (commonly known as junk bonds), being included in the ratings framework by traditional credit rating agencies is already a significant endorsement.