Moody’s downgrades Coinbase bond rating

Moody’s downgraded Coinbase’s bitcoin-exchange rating from Ba2 to Ba3, with a further downgrade anticipated. Analysts attributed the move to the negative crypto market environment.

Simultaneously with the issuer default rating decision, the agency lowered Coinbase’s guaranteed senior unsecured bonds rating from Ba1 to Ba2.

“The downgrade reflects material declines in revenues and cash flows due to sharp declines in digital asset prices […] and softer client activity,” the press release said.

The company’s revenue model is tied to trading volumes, per-user transactional activity, and overall crypto-asset prices, analysts noted.

The agency would consider upgrading Coinbase’s rating if the company turns a profit in a bear market and can diversify its revenues away from trading and cryptocurrency prices. In the first quarter, this direction accounted for 87% of Coinbase’s net revenue.

The company has issued two bond tranches maturing in 2028 and 2031, totaling $2 billion.

For January–March 2022, Coinbase posted a net loss of $429.7 million, a figure that nearly doubled analysts’ expectations.

Against a weak start to the year and a slowdown in the crypto market, the cryptocurrency exchange began to optimize costs. began optimizing costs.

Earlier, CEO Brian Armstrong announced a reduction of about 18% of staff amid the crypto-winter.

In June 2022, the competing Binance.US scrapped commissions on a number of trading pairs.

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