Moody’s Investors Service has assigned a provisional rating to New Hampshire’s Bitcoin-backed US municipal bonds.
summary
- Moody’s has temporarily assigned a Ba2 rating to New Hampshire’s bitcoin-backed municipal bonds, placing them in a speculative grade due to credit risk.
- The classification remains subject to final legal documentation, representing an important step before pricing and potential market entry.
- The $100 million bond structure is based on over-collateralized Bitcoin, with borrowers providing approximately 160% of the collateral and custody handled by BitGo.
For every Tuesday statementThe agency assigned the bonds a Ba2 rating, which falls within the “speculative grade” category and reflects significant credit risk.
However, it should be noted that the rating is provisional, which typically means that Moody’s has reviewed the necessary documents to reach its rating, but is still waiting for final legal documents before issuing a final ruling.
Such assessments offer institutions a way to assess credit risk and guide decision-making, with some investors restricted to investment-grade assets. For the proposed bonds, this represents a major step toward potential institutional participation.
As for the next step, the product must be priced before entering the market.
The first of its kind
the Bitcoin-backed bonds approved By New Hampshire’s business financing agency, the New Hampshire Business Finance Authority, in November of last year to create what it described as a first-of-its-kind $100 million bitcoin-backed conduit bond.
Municipal bonds are typically backed by government credit or project revenue streams, but in this case, the structure is based on hyper-collateralized Bitcoin.
Under the proposed structure, borrowers would offer about 160% of the value of the bonds in bitcoin, with BitGo set to serve as an external trustee, along with a government entity that would oversee the bonds without bearing the repayment risk.
The program fees are expected to support the Bitcoin Economic Development Fund, allowing the state to reinvest in business growth and financial innovation.
The bonds do not have an official launch date, but their rating has been affected by Bitcoin’s recent volatility, according to Moody’s.
A Ba2 rating puts the bond below the investment grade level and means it is considered a speculative investment.
