Ledn Secures A- Equivalent Rating from Agio Ratings for Bitcoin-Backed Loans

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Oct 02, 2024, 09:14 ET

The industry-first A- equivalent credit rating establishes a new benchmark in digital asset lending.

GEORGE TOWN, Cayman Islands, Oct. 2, 2024 /PRNewswire/ -- Ledn, a leading digital asset lending platform providing a comprehensive suite of lending, savings, and trading products since 2018, today announced it has received an industry-first A- equivalent credit rating from Agio Ratings, a trusted authority in credit insights for the digital asset sector, in connection with its funding vehicle for its Custodied Loans (Funding Vehicle). This groundbreaking rating — comparable to those issued by major ratings agencies — marks a significant step forward in advancing institutional understanding and adoption of Bitcoin-backed financing. It further reinforces Ledn's dedication to transparency, security, and delivering institutional-grade standards in the digital asset lending market.

Agio Ratings has assigned Ledn's Funding Vehicle an A- equivalent rating, akin to holding unsecured senior debt in an A- rated company.

Key Findings from the Agio Report:

Default Risk: 0.43% probability of losses over the next 12 months.
Loss Given Default: 10% estimated net present value of losses in the event of default.
Expected Loss: 0.04%, equivalent to holding unsecured senior debt of an A- rated company.

"This rating is a testament to our relentless focus on transparency and risk management as we continue to set new benchmarks for institutional-grade Bitcoin-backed lending," said John Glover, Chief Investment Officer at Ledn. "By providing this level of insight, we're giving both institutional and high-net-worth investors the confidence to navigate the digital asset space with greater trust in the strength and security of our Bitcoin-backed loan products."

This rating comes at a crucial time for the digital asset lending industry and can play a pivotal role in building trust and attracting institutional capital back to the sector. The collapses of firms like BlockFi and Celsius highlighted the need for greater transparency and risk management.

The A- equivalent rating applies specifically to Ledn's Funding Vehicle related to its Custodied Loans product, which allows retail borrowers to receive USD loans collateralized by their Bitcoin (BTC) or Ethereum (ETH) holdings. The collateral for Custodied Loans is held in cold storage or with qualified custodians, ensuring the highest levels of security.

Agio Ratings' comprehensive methodology evaluates various risk scenarios facing the SPV from a Lender's perspective: including credit, market, liquidity, criminal, operating, legal, and business risks. Such a holistic approach provides a nuanced view of the risks and strengths of Ledn's Custodied Loans Funding Vehicle. The rating is based on extensive financial and operational information disclosed by Ledn — combined with Agio's proprietary risk models.

The report also evaluates the default risk, loss scenarios, and structural resilience of Ledn's Funding Vehicle for its retail Custodied Loan book, highlighting its robust over-collateralization and auto-liquidation mechanisms. The report identifies default probability and expected loss, benchmarking Ledn's Funding Vehicle against an A- rating from other major ratings agencies. This analysis provides institutional lenders with the necessary insights to make informed investment decisions in bitcoin-backed financial products.

"The profitability and capital efficiency of digital asset markets require risk transfer and, by extension, counterparty risk management." These are the financial forces that drove traditional finance to develop credit risk ratings," said Henry Stott, PhD, Head of Research at Agio Ratings. "Our ratings are the kind of quantitative, real-time risk assessment that are needed to facilitate crypto-counterparty trading. We modeled Ledn's business based on access to their financial data and a comprehensive understanding of their operations and contractual obligations. The resultant rating assesses Ledn's credit risk as well as identifying their main exposures, helping their team to focus risk management resources and develop mitigation strategies."

For more information, please visit https://www.agioratings.io/

About Ledn
Ledn is the leading digital asset lender in the world. With a commitment to security, transparency, and innovation, Ledn provides clients with the tools to grow their digital asset portfolios responsibly. Ledn has originated over $6.5B in loans since its inception in 2018 and is a registered virtual asset service provider (VASP) regulated by the Cayman Islands Monetary Authority.

For more information, please visit: https://ledn.io/

About Agio Ratings
Agio Ratings is a credit and risk analysis firm focused on high-growth and emerging industries. With a team of seasoned financial professionals, statisticians, and data scientists, Agio has developed proprietary risk models that capture the unique and volatile risks impacting the digital asset market. Agio is trusted by leading firms in the industry and backed by globally renowned investors, including Superscrypt, Portage, and MS&AD Ventures.

For more information, please visit: https://www.agioratings.io/

SOURCE Ledn