Cryptocurrency lending firm Ledn Inc. has issued $188 million in securitized bonds backed by Bitcoin, marking the first transaction of its kind in the asset-backed securities market. According to informed sources, the deal involves two bonds, with one portion being investment-grade and priced 335 basis points above the benchmark interest rate. Jefferies Financial Group Inc. acted as the sole structuring agent and bookrunner for the transaction.

A report from S&P Global Ratings indicates that the bonds are secured by a pool of assets comprising over 5,400 loans, where consumers borrow from Ledn using their Bitcoin holdings as collateral. The report, dated February 9, shows that the weighted average interest rate on these loans is 11.8%.

Bitcoin's significant price volatility poses a risk that loans tied to cryptocurrency could become undercollateralized if prices fall sharply. However, S&P noted that investors in Ledn's asset-backed securities may be partially shielded from this risk due to the lender's algorithmic liquidation mechanism. This system automatically sells the collateralized Bitcoin if a loan triggers a default, using the proceeds to repay the loan.

S&P also mentioned in its report that following a nearly 50% drop in Bitcoin's price from its October peak earlier this month, Ledn liquidated a considerable portion of the loans within the securitized pool. Although Bitcoin's price has since recovered somewhat, it remains approximately 46% below its October high, trading around $66,484 during New York hours on Wednesday.