In the industry, S&P Compound Prime Junk Credit Rating gives
In the industry, S&P Compound Prime Junk Credit Rating gives
- The Defi protocol is the first to receive a credit rating from S&P Global Ratings
- Low capital base, increasing official review and return obligations were areas that were concerned with creditors
The first institutional defi company rated by S&P Global received the grade of B- or junk.
S&P Global Ratings has granted Compound Prime a long-term credit rating from B-. It is the first time that an institutional defi offer (decentralized financing) was assessed by the agency,
Compound Prime, a subsidiary of Compound Labs, has a stable view, but rating emitters mentioned uncertain regulatory conditions in relation to stable coins and the currently "very low" capital base of Compound Treasury-as well as its 4-percent yield obligation-as concerns.
Compound Prime supervises Compound Treasury, the company's security offer, which converts the US dollar into StableCoin USDC and accredited investors, according to Reid Cuming, General Manager of Compound Treasury.
The Treasury offer was first announced in June 2021.
A B-rating, a junk rating six levels under investment, means that the company is more vulnerable to unfavorable financial conditions, even though it is "currently capacity to comply with financial obligations," said S&P Global Ratings in his Explanation .
"As part of the ongoing discussions with S&P, the ratings of Compound Treasury could be raised in upward scenarios such as greater regulatory clarity for the digital-asset industry or a longer success story of stable performance", said Cuming in a Rel = "Nofollow noopener" Target = "_ Blank" href = "https://medium.com/compound-finance/compound-treapery-sp-credit-897aff3a6f8c"> Explanation .
The decision of S&P to assign a rating to a Defi protocol, which according to the Compound is a premiere, shows that greater acceptance is imminent, said Cuming.
"Over time, traditional financial markets and defi will grow together," said Robert Leshner, founder of Compound. tweeted . "Compound Treasury is one of the products that accelerate this transition by offering institutions a cash management product based on the compound protocol."
ratings are more common, added Lesher, which would help promote institutional demand.
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The contribution "In Industry First, S&P gives Compound Prime Junk Credit Rating" is not a financial advice.