Ledn Completes First $188M Bitcoin-Backed Securities Issuance

- The deal was structured and sold by investment bank Jefferies Financial Group, which acted as the sole structuring agent and bookrunner. The offering was more than two times oversubscribed, indicating strong institutional investor demand. - The asset-backed security is supported by a pool of over 5,400 Bitcoin-collateralized consumer loans made to 2,914 borrowers. These are short-term, fixed-rate balloon loans, meaning the principal and accrued interest are paid in a single lump sum at maturity. - The underlying loan pool has a total principal balance of approximately $199.1 million, secured by 4,078.87 BTC. The loans have a weighted average interest rate of 11.8%. - The issuance is split into two tranches: a $160 million senior tranche rated BBB- (sf) by S&P Global Ratings, and a $28 million subordinated tranche rated B- (sf). The BBB- rating is significant as it is the first time a major rating agency has given an investment-grade rating to a digital asset lending portfolio. - To protect investors from Bitcoin's price volatility, the structure includes an automated collateral liquidation mechanism. If a loan-to-value (LTV) ratio approaches 80%, the Bitcoin collateral is automatically sold to repay the loan. - The investment-grade tranche was priced at a spread of 335 basis points over the benchmark rate, which is a premium compared to similarly rated traditional asset-backed securities, reflecting the novelty risk of the crypto collateral. - Ledn, founded in 2018 by Adam Reeds and Mauricio Di Bartolomeo, is a Toronto-based digital asset lending platform that has raised over $104 million in funding from investors including Kingsway Capital, White Star Capital, and Coinbase Ventures. The company had a valuation of $540 million as of its Series B funding round in late 2021.