New Hampshire in the U.S. Moves to Issue $100 Million Bitcoin-Backed Bonds

A public agency in the U.S. state of New Hampshire is moving to issue bonds backed by Bitcoin (BTC).

According to The Block on the 31st (local time), the New Hampshire Business Finance Authority is preparing a total of $100 million in Bitcoin-backed bond issuance.

Moody’s assigned the bond a ‘Ba2’ rating. This is a speculative-grade rating two notches below investment grade, meaning it may entail high risk.

Moody’s said it "took into account the collateral structure, transaction structure, and operational risks of service providers."

The bond is designed based on loans collateralized by Bitcoin, and repayment sources are limited to cash flows generated from the collateral assets. Although the issuer is a public agency, public funds such as tax revenue will not be used for repayment.

Custody and liquidation of Bitcoin will be handled by the custody firm BitGo. BitGo will keep the collateral in a separate wallet and, if necessary, sell Bitcoin to make interest and principal payments.

The bond also includes mechanisms to manage collateral value. The initial collateralization ratio is set at 1.60x, and early redemption is triggered if the loan-to-value (LTV) ratio deteriorates to around 1.40x.

This bond issuance is being pursued as U.S. public agencies seek ways to utilize digital assets. Recently, the U.S. Department of Labor proposed regulatory revisions that would allow digital assets to be included in retirement plans (401k).