Crypto lender Ledn Inc. has sold $188 million in securitized bonds backed by Bitcoin-linked loans, marking a first-of-its-kind deal in the asset-backed debt market.

The transaction includes two bond tranches, according to Bloomberg, one of which received an investment-grade rating and priced at a spread of 335 basis points over the benchmark rate, according to people familiar with the matter. Jefferies Financial Group Inc. served as the sole structuring agent and bookrunner.

The bonds are secured by a pool of more than 5,400 consumer loans issued by Ledn, where borrowers used their Bitcoin holdings as collateral, according to an S&P Global Ratings report. 

The loans carry a weighted average interest rate of 11.8%.

Bitcoin’s price volatility remains a central risk. Loans tied to the cryptocurrency can fall underwater if prices decline sharply. 

S&P’s Ledn bitcoin bond ratings

S&P said investors may be partly protected because Ledn uses algorithmic liquidation to sell Bitcoin collateral when a default trigger is reached, applying the proceeds to repay outstanding loans.

The report noted that bitcoin’s sharp decline in early February forced Ledn to liquidate a “significant share” of loans slated for the deal. S&P said all liquidations were executed below an 81.4% LTV threshold, shifting the portfolio mix toward fewer loans and more cash in the funding account, while keeping the total collateral package at $200 million.

S&P’s analysis focused on borrower default behavior, recovery rates during liquidation, and concentration risk.  The agency said margin-driven defaults represent the most acute stress scenario because liquidations occur when bitcoin prices are falling, potentially into thin or volatile markets where execution slippage matters most.

Because Ledn underwrites loans primarily based on bitcoin collateral rather than borrower credit profiles, S&P said traditional consumer loan performance metrics are limited. 

At the ‘A’ stress level, the agency applied a conservative 100% default assumption, with modeled stresses for the rated notes including a 79% default rate and 68% recovery for the BBB- class A tranche.

S&P highlighted structural mitigants including overcollateralization, early amortization triggers, a liquidity reserve funded at 5% of note balance, and Ledn’s automated liquidation engine, which it said has successfully liquidated 7,493 loans over seven years without principal losses.

Ledn plans to require cash interest payments for renewals starting in 2027, which S&P said reduces liquidity stress over time. 

Bitcoin has since recovered modestly but remains about 46% below its October high, trading near $66,000 today.