Bitcoin-backed loan issuer Ledn dodges ‘junk’ bond rating from S&P Global

Ledn’s loans are rated in line with government debt in Kazakhstan, Hungary and Morocco, according to S&P Global Ratings.

On Monday the agency gave the loan issuer, which accepts Bitcoin as collateral, a preliminary rating of BBB- for its Issuer Trust 2026-1.

That’s one grade above what is generally considered non-investment grade junk bond territory.

Still, BBB- is so far the best rating achieved by a crypto firm on its debt. It’s five intermediate grades higher than DeFi lender Sky and Michael Saylor’s Strategy, which both received B- ratings last year.

Ledn’s rating comes as more and more crypto firms look to bolster their credentials as Wall Street investors eye the industry on the back of landmark regulation in the US.

With industry mainstays like stablecoin issuer Circle and exchange Gemini conducting huge initial public offerings last year — and more expected in 2026 — crypto-native firms are out to prove they can hold their own against the titans of the traditional financial system.

Ledn did not immediately respond to a request for comment.

What is Ledn?

Ledn, a Cayman Islands-based firm launched in 2018, offers retail investors US dollar-denominated loans against their Bitcoin holdings.

All loans are overcollateralised, meaning that borrowers must lock up Bitcoin of a higher US dollar value than the amount they are able to borrow.

The firm’s loans are proving popular. In October, Ledn announced it had surpassed $1 billion in Bitcoin-backed loans for 2025, bringing its total loan originations since inception to over $2.8 billion.

Ledn’s Issuer Trust 2026-1 combines these Bitcoin-backed loans into an investment product. Simply put, the firm bundles many individual Bitcoin loans together into a trust, then sells shares in it to big institutional investors who earn interest generated on the loans.

The trust is split into two tranches: Class A, which accounts for $160 million and received a BBB- rating, and Class B, which holds $28 million and received a B- rating.

Ledn isn’t the first crypto project to commission a debt rating from S&P Global.

In August, DeFi lender Sky received a B- rating from the credit rating agency, putting the protocol’s USDS and DAI stablecoins on par with government bonds from the Democratic Republic of the Congo.

Strategy, the Bitcoin treasury company chaired by Michael Saylor, also received a reaffirmed B- rating in October.

Why BBB- rating?

Several strengths factored into Ledn’s BBB- rating.

Positives included the firm’s conservative initial loan-to-value ratios, which provide a buffer against Bitcoin price volatility.

The ratings agency also noted Ledn’s strong track record. Over seven years, the firm has successfully liquidated Bitcoin collateral on 7,493 loans and has never experienced a loss.

Yet multiple weaknesses also weighed on the rating.

Bitcoin’s high volatility is a core concern. Sharp price drops coupled with low liquidity in the market could create a situation where Ledn is unable to liquidate the Bitcoin backing borrower loans fast enough, resulting in losses for the trust’s investors.

Additionally, the relative newness of Bitcoin-backed lending, coupled with the trust’s dependence on Bitcoin, caps the rating below higher grades like A or AA, where more traditional loans, such as mortgages, might score.

Finally, because Ledn’s customers are primarily in the US and other developed countries, the general financial health of consumers can help gauge risk.

“Monitoring the interplay between consumer resilience and BTC’s price volatility is essential to understanding the stability of the borrower pool and the likelihood of systemic deleveraging,” S&P Global’s report said.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.