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Coinbase bonds dragged lower as crypto market slumps

Nov 22 (Reuters) – Coinbase Global’s ( COIN.O ) bonds fell heavily, its shares hitting record lows, as investors abandoned crypto after rival FTX’s collapse earlier this month.

The crypto exchange’s 2031 note traded at 51 cents on the dollar on Tuesday, down from its August high of 68.50, with yields – which trade inversely to price – rising to 13.1%, according to Refinitiv data.

At the start of 2022, those notes were trading closer to 93 cents on the dollar.

By comparison, the yield on the 10-year US Treasury bond traded around 3.806%.

The rise in Coinbase yields and the increasing premium over the corresponding 10-year US Treasury yield signaled that investors are becoming increasingly concerned about the crypto exchange’s creditworthiness.

The yield on Coinbase’s notes due 2026 was at 15.52%, after hitting a record high of 15.78% on Friday.

Moody’s Investors Service said Monday it has put Coinbase’s corporate family rating, currently at Ba3, on review for downgrade.

A rating of Baa3 and below is considered “junk” territory and highly speculative. Coinbase is rated one notch below.

Moody’s said the collapse of FTX has increased the level of uncertainty in the crypto industry, creating challenges for everyone working in the sector.

The crypto exchange is likely to see “an increasing possibility of sustained reductions in trading volumes and customer engagement, which are important factors for Coinbase’s revenue,” Moody’s vice president and senior analyst Fadi Abdel Massih said.

Shares of Coinbase have lost nearly 38% in value this month, closing at a record low of $41.23 on Monday. Their value is about a tenth of the level when they publicly listed in April 2021 to much fun in New York.

Reporting by Medha Singh in Bengaluru and Chiara Elisei in London; Editing by Amanda Cooper and Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles.

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