MicroStrategy’s Most Recent Bond Drops Below Par as Bitcoin Sells Off

MicroStrategy’s Most Recent Bond Drops Below Par as Bitcoin Sells Off

MicroStrategy’s latest bond to finance the company’s additional purchase of bitcoin is now trading below its face value as the cryptocurrency continues to suffer a sell-off.

  • Prices on the $500 million bond, which closed on June 15, dropped almost three points after the company said on Monday that it completed its purchase of 13,005 bitcoin at an average price of $37,617. Bitcoin was trading at around $32,780 as of press time.
  • On Tuesday, prices on the bond were indicated at 97.75, down from 100.62 on June 18, according to pricing data of Trace.
  • Yields were at 6.53% on Tuesday, 40.5 basis points higher than its coupon rate of 6.125%. Bond prices and yields move in opposite directions.
  • The bond, which is due 2028, is guaranteed by the new bitcoins MicroStrategy bought and any other digital assets the company acquires in the future.
  • Meanwhile, another of the Virginia-based software company’s debt instruments, a $1.05 billion convertible bond, was indicated at 68.76, down from 74.23 on June 18.
  • If bitcoin’s price remains at its current level of $32,668, the company will need to write down roughly $64 million for its recent bitcoin purchase.
  • At last count, MicroStrategy held some 105,085 bitcoins. The company has so far issued more than $1.5 billion in convertible notes and junk bonds to fund such purchases.
  • MicroStrategy's equity also took a hit Tuesday, with shares trading down 4% as of press time.
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