Strategy Preferred Share Price Outperforms Convertible Debt: Reducing Credit Risk

Strategy’s perpetual preferred stock (MSTR) value reached $8.36 billion, surpassing $8.2 billion in convertible debt for the first time. This shift in the company’s capital structure signals a significant reduction in credit risk and a shift to a more stable financial model based on Bitcoin’s long-term accumulation.

The growth in the value of preferred securities from the point of view of investment security is a qualitative improvement. The company is gradually getting rid of the encumbrances associated with convertible bonds, which carry refinancing risk and create volatility in the balance sheet tied to fluctuations in the share price.

Why perpetual preferred stock is more reliable

The key difference between the two tools is their structure. Convertible bonds are debt instruments with a fixed maturity that pay interest. In the case of Strategy, the first maturity date is at the end of 2027, covering approximately $1.2 billion of nominal debt.

In contrast, perpetual preference shares do not have a maturity date and do not create principal repayment obligations. They pay a fixed dividend and occupy an intermediate position in the borrowing hierarchy: above ordinary shareholders, but below creditors. This means that the company is not under pressure to refinance in the short term.

“The absence of convertible bonds with a higher priority than preferred stock should not only improve absolute credit spreads, but also reduce the volatility of credit spreads,” said Dylan LeClaire, head of bitcoin strategy at Metaplanet.

Cost of Capital Structure Strategy

Strategy’s preferred stock portfolio includes four different issues:

• STRD: Face value of $1.4 billion
• STRK: Face value of $1.4 billion
• STRC: capitalization $3.4 billion
• STRF: capitalization of 1.3 billion dollars

The cumulative annual dividend on these instruments is approximately $876 million. In addition, Strategy maintains a cash reserve of $2.25 billion, which further strengthens the company’s dividend servicing position and reduces short-term financing risks.

Change in the structure of share capital

The number of ordinary shares outstanding has increased significantly due to open market offerings used to finance bitcoin acquisitions. In 2020, Class A shares were 76 million units; Now there are more than 310 million of them.

Although this has led to some dilution of the ownership of existing shareholders, the increased base of outstanding shares potentially reduces future risks associated with the conversion. In the event that convertible bonds are eventually converted into shares, the larger volume of shares outstanding will reduce the relative dilution.

Market reaction and current state

Strategy shares rose 2.23% to $163.81 on Wednesday, subsequently trading 0.14% higher in the presale session. However, in a broader context, the market faced volatility. Bitcoin, the main asset of Strategy’s accumulation, experienced a significant drop, dropping to $85,200, a new low for 2026. At the time of the last update, BTC is trading near $83.60K, reflecting the current volatility in the crypto market.

The overall decrease in credit risk, due to the predominance of preferred shares over convertible debt, improves the company’s long-term financial profile. This allows Strategy to focus on the core strategy of accumulating bitcoin without being distracted by urgent refinancings, while providing holders with an additional layer of security thanks to a robust capitalization structure.