Cryptocurrency lender Ledn closed a $188 million asset-backed securities sale Tuesday, completing the first public Bitcoin (BTC)-backed bond transaction after liquidating approximately one quarter of the loans intended to back the deal.
Bitcoin's 27% decline from mid-January forced automated sell-offs before the transaction closed.
The deal comprises two bonds, including an investment-grade BBB- tranche that priced at 335 basis points over the benchmark rate.
Jefferies Financial Group served as sole structuring agent and bookrunner.
Liquidations Before Closing
Bitcoin's drop to approximately $60,000 in early February triggered margin calls across Ledn's loan portfolio, forcing liquidation of roughly 1,300 loans below an 81.4% loan-to-value threshold.
The liquidations shifted the pool from interest-generating loans to cash while maintaining $200 million total collateral, according to S&P Global Ratings.
The bonds are secured by 5,441 loans to 2,914 borrowers with $199.1 million aggregate principal as of December 31, 2025. The loans carry an 11.8% weighted average interest rate and were backed by approximately 4,079 Bitcoin valued at $356.9 million.
Asset-backed securities issuers rarely liquidate such substantial shares of supporting loans before completing sales, highlighting difficulties creating structured products backed by volatile cryptocurrency collateral.
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S&P Risk Assessment
S&P Global Ratings flagged Bitcoin's historic volatility and reinvestment risk as primary concerns. The agency noted Ledn underwrites loans based on Bitcoin collateral rather than borrower credit profiles, limiting traditional performance metrics.
At stress levels, S&P modeled a 79% default rate and 68% recovery for the investment-grade tranche. The agency warned bondholders could face losses approaching one-third of principal at modeled stress levels.
Ledn's automated liquidation system has processed 7,493 loans over seven years without principal losses, according to S&P. The lender requires borrowers to add Bitcoin when ratios exceed 70% and liquidates collateral at 80%.
Bitcoin traded near $67,400 Wednesday, down approximately 46% from its October 2025 peak above $126,000.
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