Strategy's credit risk falls as preferred equity value surpasses convertible debt

Source: CryptoNewsNet Original Title: Strategy’s credit risk falls as preferred equity value surpasses convertible debt Original Link: Credit risk at Strategy (MSTR) eased as the notional value of its perpetual preferred equity overtook its outstanding convertible debt, reducing maturity and refinancing concerns tied to its bitcoin accumulation strategy.

The aggregate value of the perpetual preferred equity stands at $8.36 billion, surpassing the $8.2 billion of outstanding convertible debt, the company’s dashboard showed Thursday.

The growing dominance of preferred equity points to a more stable capital structure with reduced credit volatility. Convertible bonds introduce refinancing risk and equity-linked balance sheet volatility. Perpetual preferreds, however, don’t impose an obligation to repay the principal.

“Having no convertible bonds senior to the preferreds it should not only improve absolute credit spreads but should diminish credit spread volatility”, Dylan LeClair, head of bitcoin strategy at Metaplanet, said in a post on X.