"Crypto lender Ledn Inc. has sold $188 million in securitized bonds backed by Bitcoin-linked loans, marking a first-of-its-kind deal in the asset-backed debt market. The transaction includes two bond tranches, according to Bloomberg, one of which received an investment-grade rating and priced at a spread of 335 basis points over the benchmark rate, according to people familiar with the matter. Jefferies Financial Group Inc. served as the sole structuring agent and bookrunner."
"The bonds are secured by a pool of more than 5,400 consumer loans issued by Ledn, where borrowers used their Bitcoin holdings as collateral, according to an S&P Global Ratings report. The loans carry a weighted average interest rate of 11.8%. Bitcoin's price volatility remains a central risk. Loans tied to the cryptocurrency can fall underwater if prices decline sharply."
"S&P said investors may be partly protected because Ledn uses algorithmic liquidation to sell Bitcoin collateral when a default trigger is reached, applying the proceeds to repay outstanding loans. The report noted that bitcoin's sharp decline in early February forced Ledn to liquidate a "significant share" of loans slated for the deal. S&P said all liquidations were executed below an 81.4% LTV threshold, shifting the portfolio mix toward fewer loans and more cash in the funding account,"
Ledn completed a $188 million securitization of consumer loans collateralized by Bitcoin, forming the first Bitcoin-backed asset-backed debt transaction. The structure includes two tranches, one rated investment-grade and priced at a 335 basis-point spread, with Jefferies as sole structuring agent and bookrunner. The collateral pool contains more than 5,400 loans with a weighted average interest rate of 11.8%. Bitcoin price volatility poses the primary risk because collateral values can fall rapidly. Ledn employs algorithmic liquidation when default triggers occur. S&P focused its analysis on borrower default behavior, recovery rates during liquidation, concentration risk, and margin-driven default scenarios.
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