New Hampshire's Business Finance Authority, a public agency in the U.S. state, plans to issue about $100 million of municipal bonds backed by bitcoin.
Bloomberg reported that Moody's Investors Service assigned the bonds a Ba2 rating, two notches below investment grade.
Principal and interest will be repaid from returns generated by the bitcoin collateral. Additional gains are also possible if the bitcoin price rises. If bitcoin falls below a certain level, an automatic liquidation clause is triggered to protect repayment.
Bloomberg reported that New Hampshire state government credit or taxes will not be used as a source of repayment for the bonds.
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