A significant advancement has been made in New Hampshire’s ambitious effort to introduce a municipal bond backed by Bitcoin. The project was given a provisional Ba2 rating by Moody’s Investors Service on Tuesday, indicating the risks associated with the structure and classifying it as “speculative”.
For each bond, a credit rating is an important milestone. It guides institutions in determining whether to invest and aids investors in comprehending the degree of risk involved. Since this bond is below the investment-grade asset level, more conservative investors may not be able to participate as much.
Concerns about the volatility of Bitcoin’s price are reflected in the Ba2 grade. Even though research indicates that Bitcoin’s volatility has decreased over time, it still swings more dramatically than more conventional assets like gold or large stock indexes.
Moody’s stated that its evaluation takes into account elements that affect the bond’s risk profile, such as the liquidity of Bitcoin and a specified exposure duration.
The New Hampshire Business Finance Authority has approved the initiative, which seeks to generate $100 million. With BitGo serving as the custodian, it will enable businesses to borrow money against over collateralised Bitcoin holdings.
The rating indicates increasing interest in combining traditional banking with digital assets, even though the bond does not yet have a launch date. If it is successful, it might establish a standard for future public finance methods that are connected to cryptocurrencies.
Source: Solana Floor
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