The post Coinbase May Become First S&P 500 Company to Buy Bitcoin With $2B in Private Note Funds appeared first on Coinpedia Fintech News
Coinbase is preparing to raise $2 billion through a private convertible note offering, potentially to buy Bitcoin. If confirmed, this would make Coinbase the first company in the S&P 500 to purchase Bitcoin using funds from a debt offering. Even though Coinbase saw a drop in revenue during the second quarter, the U.S.-based crypto exchange, which is listed on the Nasdaq, is now turning to the capital markets to raise funds.
Coinbase Bridges Traditional and Crypto Markets
Coinbase, one of the largest crypto exchanges in the world, revealed on Tuesday that it plans to raise $2 billion through a special type of debt called convertible senior notes. These notes are being offered only to big institutional investors. The offering includes $1 billion in notes that mature in 2029 and another $1 billion that will mature in 2032.
According to the company, the notes will be unsecured and will pay interest twice a year. The final interest rate and the terms for converting the notes into Coinbase shares will be set once the pricing is finalized.
In addition, Coinbase said it may offer investors the chance to buy up to $150 million more of each set of notes, both the 2029 and 2032 versions, if there’s strong demand.
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Coinbase plans to enter capped call transactions to reduce stock dilution if its new convertible notes are turned into shares. These deals may also help offset extra cash payments above the note’s principal.
The company said counterparties might trade Coinbase stock and derivatives to manage risk. Part of the funds raised will go toward these capped calls, while the rest may be used for general expenses, acquisitions, or paying off existing debt, including earlier bond issues due between 2026 and 2031.
This may include paying down its 0.50% convertible notes maturing in 2026, 3.375% senior notes due in 2028, 3.625% notes set to mature in 2031, and 0.25% convertible notes due in 2030.
Coinbase Follows Strategy and MARA
Coinbase’s fundraising plan comes during a busy summer for crypto companies using convertible notes to raise money. Other big names like MicroStrategy and Marathon Digital (MARA) have recently done the same, aiming to boost financial flexibility and limit share dilution using capped call strategies.
MicroStrategy, led by Michael Saylor and known as the largest corporate holder of Bitcoin, helped popularize this approach. The company has frequently used stock offerings to fund its Bitcoin purchases.
On July 21, MicroStrategy launched an IPO of 5 million shares of a new synthetic stock that includes cumulative dividends and is expected to trade around its face value of $100 per share.
Just a week earlier, on July 14, crypto asset manager Grayscale filed a confidential IPO application with the U.S. Securities and Exchange Commission (SEC, a move toward launching its own public offering in the near future.