New Hampshire’s proposed Bitcoin-backed municipal bond moved closer to issuance after Moody’s Investors Service on Tuesday assigned it a provisional Ba2 rating. The Ba2 designation is speculative grade and signals substantial credit risk.
Moody’s said the provisional rating reflects a full review of available materials but awaits certain final legal documents before converting to a final rating. The next practical step would be pricing the offering; the bond has no announced launch date.
Ratings help institutions assess credit risk and determine eligibility for investors with mandates limited to investment-grade assets. Moody’s cited Bitcoin’s volatility and liquidity considerations as the primary drivers of the Ba2 outcome. Its analysis used a 72.06% advance rate and a two-day exposure period, assumptions that correspond to a Ba2 rating for Bitcoin collateral and that reflect Bitcoin’s historical volatility and liquidity.
While Bitcoin’s volatility has trended downward, it remains materially higher than assets such as the Nasdaq-100 and gold, S&P Global noted in a recent report, with crypto-specific idiosyncratic factors continuing to influence price swings.
The New Hampshire Business Finance Authority (BFA) approved the state’s municipal Bitcoin-backed bond project in November, positioning it as the world’s first state-issued bond backed by Bitcoin. The initial issuance contemplated $100 million of bonds, enabling companies to borrow against overcollateralized Bitcoin.
BitGo Trust Company Inc. is designated as the custodian for the BTC collateral. The structure was designed by Wave Digital Assets in partnership with bond specialist Rosemawr Management. The BFA said fees generated by the program would fund a Bitcoin Economic Development Fund to support business growth and financial innovation across New Hampshire.
The provisional Ba2 rating underscores the novel risks of a Bitcoin-collateralized municipal product, particularly price volatility and liquidity dynamics, which investors and issuers will weigh as the issuance moves toward pricing and potential market launch.