Bitcoin Bonds: A New Twist in Public Finance

New Hampshire’s Business Finance Authority is about to launch a bond that stands out because it uses bitcoin as its safety net. The bonds will carry a provisional Ba2 rating from Moody’s, which is just below the investment‑grade line. The plan is to back each bond with a specific amount of bitcoin, worth about $68, 090. 52, that is held in custody by a company called BitGo. Instead of relying on cash flow from a business, the bonds will be repaid by selling the bitcoin if necessary. The structure includes extra safety measures: the collateral is 1. 6 times larger than the loan, and there are rules that trigger a sale of the bitcoin if its value drops too much. These safeguards mirror those found in other structured credit deals.Moody’s points out that the rating takes into account risks from the bitcoin itself, such as its price swings, and from how the whole setup works. The agency used a 72 % advance rate and short timeframes for selling the bitcoin when needed to model how bad things could get. Because the bonds are “limited recourse, ” no public money from New Hampshire can be used to pay them back. The state’s authority acts more like a conduit than a direct borrower, so the bonds do not carry the state's credit rating. This move puts bitcoin into a part of finance that rarely sees it: rated debt issued through public channels. Even though the Ba2 rating signals speculative risk, it also shows that credit agencies are starting to create rules for evaluating crypto‑backed instruments.