New Hampshire Issues Rated Bitcoin-Backed Bonds

TLDR

• Moody’s Ratings assigned a provisional Ba2 rating to the bitcoin-backed bonds issued through a New Hampshire state authority.
• The bonds rely on bitcoin held as collateral and do not depend on business cash flow for repayment.
• BitGo will hold the bitcoin in custody and will liquidate it if needed to meet interest and principal payments.
• The transaction includes 1.6x overcollateralization and loan-to-value triggers to protect bondholders.
• The bonds carry limited recourse provisions and do not place any public funds of New Hampshire at risk.

New Hampshire officials will issue a rated bond backed by bitcoin through a state authority. Moody’s Ratings assigned the bonds a provisional Ba2 rating below investment grade. The structure repays bondholders through bitcoin liquidation rather than operating cash flow.

Moody’s Assigns Ba2 Rating to Bitcoin-Backed Bonds

The Business Finance Authority of the State of New Hampshire will issue the rated bonds. Moody’s Ratings assigned a provisional Ba2 rating to the transaction. The agency placed the bonds two notches below investment grade.

Moody’s stated, “The Rated Bonds will be collateralized by a loan… backed by Bitcoin, a digital currency.” The agency said it evaluated risks tied to collateral, structure, and operations. It cited bitcoin volatility as a core factor in its assessment.

The bonds rely on Bitcoin holdings instead of revenue from a business project. BitGo will hold the bitcoin in custody under the transaction terms. The structure requires liquidation of BTC if funds are needed for payments.

The deal includes 1.6x overcollateralization to support the bond obligations. It also sets triggers that force liquidation if the loan-to-value ratio weakens. Moody’s applied a 72% advance rate in its credit modeling.

The agency modeled short liquidation periods to test downside scenarios. It based its rating on risks tied to bitcoin price swings. The Ba2 rating reflects speculative-grade credit quality under Moody’s scale.

Bitcoin Price and Collateral Structure Define Repayment Terms

Bondholders will receive interest and principal from bitcoin sales if required. The structure treats Bitcoin as the sole collateral source. The transaction does not depend on operating income.

Moody’s said the bonds carry limited recourse provisions under the documents. It stated, “No public funds of the State of New Hampshire… may be used.” The state will not pledge its credit to repay investors.

The authority will act as a conduit issuer for the transaction. The bonds will not carry a state guarantee or tax backing. Instead, the issuer will pass proceeds to the borrowing entity.

The transaction places bitcoin within a rated public debt framework. Credit analysts applied structured finance methods to the crypto collateral. The model considered advance rates and liquidation timelines.

Market data showed the Bitcoin price at $68,558.36 at the time of reporting. The rating report addressed price volatility in its stress analysis. The deal marks the first rated bitcoin-backed bond issued through a public authority.

The development comes as regulators review digital asset access in retirement accounts. The Labor Department proposed a rule following an executive order from President Donald Trump. The order directed agencies to expand digital asset access in retirement portfolios.

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