Coinbase notes slide after SEC charges; Diebold Nixdorf lower; AMC bonds stand out

By Cristal Cody

Tupelo, Miss., June 6 – Coinbase Global, Inc.’s bonds dominated junk and distressed secondary trading on Tuesday after the Securities and Exchange Commission announced it charged the crypto company with operating as an unregistered national securities exchange, broker and clearing agency.

Coinbase’s paper declined about 2¾ points to 4 points on about $70 million of volume.

Coinbase’s 3 3/8% senior notes due 2028 (B1/B) slid 4 points on nearly $42 million of trading by the close.

The SEC also said it charged Coinbase for failing to register the offer and sale of its crypto asset staking-as-a-service program.

The charges came a day after the SEC announced Monday that it charged crypto asset trading platform provider Binance Holdings Ltd. with 13 securities law violations.

Several Reddit threads were devoted to the news over the session.

The move raised the ire of users of the CryptoCurrency Subreddit site Tuesday with more than 700 comments that included users questioning what the SEC now considers securities.

“I'm kinda glad that [the] SEC, instead of just targeting Binance US, choose to fight Coinbase as well,” temperlancer said. “I think Coinbase has a better chance of fighting back with its political presence. Short-term there will be some pain. Eventually I'm hoping the lawsuits will force regulation clarities.”

Another user, Zavage3, noted, “There was a lot of shorts on cryptocurrency stocks early yesterday morning well before the news broke.”

The SEC said its complaint against Coinbase dates back to at least 2019.

Stocks climbed as measured market volatility swung to its lowest since 2020 on Tuesday.

The S&P 500 index rose 0.23%, while the CBOE Volatility index closed down 5.23% to 13.96, the lowest since February 2020.

The iShares iBoxx High Yield Corporate Bond ETF picked up 11 cents, or 0.15%, to $74.63.

In distressed bankrupt paper, Diebold Nixdorf Inc.’s 9 3/8% senior secured notes due 2025 (Ca/D) dropped 3 points in light trading.

One distressed name that stood out due to gains was AMC Entertainment Holdings, Inc., according to a market source.

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) rallied over 2 points in strong trading volume.

Coinbase paper drops

Coinbase’s paper declined about 2¾ points to 4 points on $69.95 million of trading reported in the wake of the SEC charges, a source said.

The 3 3/8% senior notes due 2028 (B1/B) slid 4 points to 60¼ bid on nearly $42 million of volume.

The company’s 3 5/8% senior notes due 2031 (B1/B) were down 2¾ points at 56 bid on $28 million of secondary action.

Coinbase’s stock (Nasdaq: COIN) closed down $7.10, or 12.09%, at $51.61 on Tuesday.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Coinbase violated certain registration provisions of the Securities Exchange Act of 1934 and securities offering registration provisions of the Securities Act of 1933.

Coinbase reported Monday that its chief legal officer, Paul Grewal, was scheduled to testify Tuesday before the House Committee on Agricultural Services on the new Digital Asset Market Structure Discussion Draft “and the need for a clear rulebook for crypto in the U.S.”

Diebold Nixdorf declines

Diebold Nixdorf’s 9 3/8% senior secured notes due 2025 (Ca/D) traded 3 points lower on Tuesday at 14 bid, a market source said.

Trading was light on about $1 million of volume.

The bonds gave back about 15 points in the prior week ahead of and following the company’s pre-packaged Chapter 11 bankruptcy filing.

Diebold Nixdorf reported that as of Monday its common shares were delisted from the New York Stock Exchange and are trading over the counter under the symbol, “DBDQQ.”

The company reported in the prior week that it entered into a restructuring agreement with key financial stakeholders for a comprehensive debt restructuring transaction that will wipe out the value of its common stock.

The Hudson, Ohio-based financial and retail technology company was facing a June debt payment after amending its credit facility in March to add a new $55 million first-in-last-out term loan tranche.

AMC notes higher

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) saw gains on Tuesday with the issue climbing more than 2 points to around 67 bid, a source said.

Trading was active on $10.25 million of volume.

The notes have added more than 5 points from where they traded on May 24 at 61¾ bid.

AMC is awaiting a court decision in the Delaware Court of Chancery regarding a settlement in a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over the company’s issuance of preferred stock.

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) was little changed on Tuesday, going out up 1 cent, or 0.22%, at $4.64.

AMC’s preferred shares (NYSE: APE) declined 1 cent, or 0.63%, to $1.57.

Distressed returns moderate

S&P U.S. High Yield Corporate Distressed Bond index one-day returns moderated on Monday to 0.47%, down from 0.95% ahead of the weekend.

Month-to-date total returns increased to 1.69% at the start of the week versus 1.22% on Friday.

Year-to-date total returns hit 8.45% on Monday, up from 7.94% on Friday.

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