New Hampshire plans to issue a $100 million Bitcoin-collateralized municipal bond and has received a Moody’s Ba2 rating, symbolizing crypto assets moving into the public bond market.
Cryptocurrencies are officially knocking on the door of the U.S. public bond market. According to a report by Bloomberg, the New Hampshire Business Finance Authority (NHBFA) is preparing to issue $100 million in Bitcoin-collateralized municipal bonds and has already obtained an initial rating from Moody’s, a major international credit rating agency.
International credit rating agency Moody’s has given this bond a “Ba2” rating, two notches below “Investment Grade,” and classified as “junk.”
The backing of the credit rating agency brings this bold financial innovation one step closer to reality. As the New Hampshire Business Finance Authority serving as the issuance conduit, it plans to issue taxable Bitcoin-collateralized notes in two series with a total value of $100 million, but the official issuance date has not yet been announced.
The repayment funds for this bond will come from liquidation proceeds of the Bitcoin collateral. If the price of Bitcoin rises, bondholders will receive additional coupon payments. Conversely, if the price of Bitcoin falls below a certain threshold, the trust mechanism will also trigger a liquidation process to ensure that creditors receive full repayment.
In response to the most pressing concern from the public—fund safety—Moody’s specifically emphasized in its report that the New Hampshire government and its related institutions’ public funds will absolutely not be used to pay any amounts related to this bond, and the issuer also has no authority to use taxing power to cover funding shortfalls.
In other words, although this bond is issued under the banner of a state government agency, the state government does not provide a credit endorsement. In terms of financial structure, it is more like a “Conduit Financing” or project financing arrangement—government agencies only serve as the issuance platform, and the actual risk is borne by investors.
Even so, this structure has still successfully pushed Bitcoin into a very rare area within the financial system: the first bond in the U.S. issued through public channels and receiving a rating from an authoritative institution. Even if “Ba2” is an speculative grade (commonly known as junk), being included in the rating system by traditional credit rating agencies is a huge endorsement.
In actual operation, this bond will be handled for day-to-day trading management by the digital asset company Wave Digital Assets LLC, while BitGo Bank & Trust will serve as the custodian. U.S. Bitcoin miner and data center operator CleanSpark will borrow this funding and provide Bitcoin as collateral to pay the principal and interest of the bond.
- This article is reprinted with authorization from: 《BlockBeast (區塊客)》
- Original title: 《First in the U.S.! New Hampshire issues “Bitcoin-collateralized bonds,” rated “Ba2” junk by Moody’s》
- Original author: BlockBeast Sister MEL
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