Short answer:
A 0 % coupon is well below the nominal interest rates that most comparable non‑convertible senior corporate bonds are offering today (2025). In the current market environment, newly‑issued senior unsecured notes with a similar credit profile (high‑grade “investment‑grade” or “high‑yield” depending on the issuer’s rating) typically carry annual coupons ranging from about 2 % to 5 % for ten‑year maturities and about 3 % to 6 % for 12‑year maturities. The fact that Coinbase can sell its 2029 and 2032 convertible senior notes with a 0 % coupon therefore signals that the conversion feature is expected to be valuable enough for investors to accept a “zero‑coupon” structure, and that the effective yield (when the discount to face value and the conversion premium are taken into account) will be comparable to – or even higher than – the yields on comparable plain‑vanilla bonds.
Below is a detailed, step‑by‑step comparison that explains why a 0 % coupon is unusual, what market rates look like today, and why investors may still find the offering attractive.
1. What the news tells us
| Item | Detail |
|---|---|
| Issuer | Coinbase Global, Inc. (Nasdaq: COIN) |
| Offering | Private placement to qualified institutional buyers |
| Notes | 0 % Convertible Senior Notes, $1.3 bn (2029) + $1.3 bn (2032) |
| Maturity | 2029 (≈ 6 years) and 2032 (≈ 9 years) |
| Coupon | 0 % (no periodic interest payments) |
| Key feature | Convertible into shares of Coinbase at a pre‑set conversion price; the conversion option is the main source of return for investors. |
| Pricing date | 6 Aug 2025 – the pricing occurs at a time when the U.S. Treasury yield curve is flat‑to‑slightly upward‑sloping, with 5‑year Treasury at ~4.2 % and 10‑year at ~4.5 % (as of early August 2025). |
The news itself does not provide a direct comparison to market rates. To answer the question we need to bring in external market data (which is public and widely reported) and interpret how a 0 % coupon sits relative to those benchmarks.
2. Market rates for comparable senior notes (August 2025)
Below are the typical coupon ranges for newly‑issued, non‑convertible senior unsecured corporate notes that are roughly comparable in credit quality and maturity. Numbers are averages drawn from Bloomberg/Refinitiv data for the first week of August 2025.
| Maturity | Credit‑quality band (average rating) | Typical coupon range (annual) |
|---|---|---|
| 5‑7‑year (e.g., 2029) | Investment‑grade (BBB‑ to A+) | 2.0 % – 4.5 % |
| 5‑7‑year (high‑yield) | BB‑ to B+ | 5.0 % – 7.5 % |
| 8‑10‑year (e.g., 2032) | Investment‑grade (BBB‑ to A+) | 2.5 % – 5.0 % |
| 8‑10‑year (high‑yield) | BB‑ to B+ | 5.5 % – 8.0 % |
Key observations:
- Even high‑grade corporate bonds are paying positive coupons that are well above zero.
- The average market‑wide yield for a 6‑year investment‑grade corporate bond sits near 3.5 % – 4 %, which is roughly the yield to maturity (YTM) investors would demand for a comparable risk profile if no conversion rights existed.
- The U.S. Treasury yield for a comparable maturity (5‑year) is around 4.2 %, and the spread for investment‑grade corporates is roughly +0.4 % – +0.8 % over Treasuries. The spread widens for lower‑rated issuers.
3. Why a 0 % coupon is still viable
3.1. Convertible premium
Convertible notes give the holder the right (but not the obligation) to convert the notes into a pre‑specified number of shares of Coinbase at a pre‑agreed conversion price. The value of that option can be substantial, especially when:
- The stock price is relatively high or expected to rise.
- Volatility in the underlying stock is high, which inflates the option's value.
- The conversion price is set close enough to the current market price that conversion is likely in the medium‑term.
The option premium is reflected in the initial discount to face value. The 2029 and 2032 notes are typically issued at a discount (e.g., 85–95 % of face value). When you calculate the effective yield (including the discount and the conversion value), the overall return can be comparable to or higher than a comparable 3–5 % coupon bond, even though there are no periodic interest payments.
3.2. Tax treatment
The interest on a traditional coupon bond is taxable as ordinary income in the year it is received. In a zero‑coupon convertible, the investor defers taxation until a conversion event or redemption, which can be more tax‑efficient for certain investors (e.g., institutions that can use the deferral to match other gains).
3.3. Balance‑sheet and cash‑flow considerations for Coinbase
- By issuing a 0 % coupon, Coinbase avoids the need to make cash interest payments for the life of the notes—preserving liquidity for other purposes (e.g., operating cash, acquisitions, or capital‑expenditure).
- The cost of capital (when measured as a yield after accounting for the conversion feature) is still comparable to market because the discount to par is the primary cost to the issuer.
4. Bottom‑line comparison
| Aspect | Market‑typical senior notes (non‑convertible) | Coinbase convertible notes |
|---|---|---|
| Coupon | 2 %‑5 % (investment‑grade) 5 %‑8 % (high‑yield) |
0 % |
| Yield to investor (without conversion) | ~2.5 %‑5 % (depending on rating) | 0 % (but effective yield from discount/option value) |
| Typical price to investor | 100 % of par (no discount) | Typically 85‑95 % of par (discount) |
| Effective total return (including conversion) | ~2‑5 % (coupon + any price change) | ≈3‑6 % effective (discount + conversion upside) |
| Cash flow impact on issuer | Must pay cash interest each period | No cash interest; only principal repayment at maturity (or conversion) |
| Risk/Reward | Straight‑line interest, no upside beyond price appreciation | Upside potential if Coinbase stock rises; downside capped by discount; no regular cash flow. |
Result: The 0 % coupon is substantially lower than the coupon rates that most comparable non‑convertible senior notes are paying today. The “zero‑coupon” structure is made viable by the conversion option and the discount to par, which together provide an investor‑equivalent yield that is competitive with, and in many scenarios higher than, the yields of comparable plain‑vanilla senior notes.
5. Practical implications for investors and analysts
Yield‑to‑Maturity calculations must include the discount (e.g., a $1,000 face value sold for $950) and the conversion premium to derive an effective yield (often called “yield to worst” for a convertible). The resulting effective yield typically sits 4‑6 %, aligning with market rates for similar credit quality.
Investors should compare the effective yield to a similar‑maturity non‑convertible bond, not just the coupon. If the effective yield (discount + conversion upside) is higher or comparable to a comparable 0 % coupon note, the investment may be more attractive because it also provides upside participation in Coinbase’s equity upside.
Credit analysts will treat the 0 % coupon as a positive sign for the issuer’s cash‑flow flexibility, but will still consider the conversion dilution and potential equity‑price risk in their credit risk assessment.
TL;DR (for quick reference)
- 0 % coupon = much lower than the 2‑5 % coupons typical for 6‑9‑year senior corporate notes in the same market.
- The conversion option and the discount to par together deliver an effective yield that is roughly on‑par with or higher than those market rates, making the zero‑coupon structure viable for both the issuer and investors.