MicroStrategy, an aggressive crypto investor, plans to sell convertible bonds to buy bitcoin for the second time in 10 days. The software company offered institutional investors $500 million in convertible notes due in 2031 after markets closed on Wednesday. The company announced a $600 million convertible note private sale on March 5.
After hitting a 24-year high Wednesday, its shares fell 5% Thursday. Its 2024 gains have roughly tripled. Bitcoin struck a record high at $73,803, extending its year-to-date gains to nearly 70%. After falling below $70,000, it was down about 3% on the day.
A 5% move (in MicroStrategy) seems mild to me, especially when bitcoin was down over $2,000," noted TD Cowen analyst Lance Vitanza. Tysons, Virginia-based MicroStrategy joined a number of high-interest convertible bond issuers.
MicroStrategy is now alone making it plain there is nothing limiting about the (monetary) policy environment," said JonesTrading chief market strategist Michael O'Rourke. In late 2020, the company began selling convertible and at-the-market stock to invest in bitcoin. The event appears to be weekly."
Convertible notes, which may be exchanged for shares when the stock reaches a certain level, allow corporations to raise capital at cheaper interest rates than bonds without diluting shareholders.
According to LSEG IFR data, MicroStrategy is selling corporate bonds for 0.375%-0.875% with an option to convert when the stock rises 40% to 45%.
Citigroup and Barclays, the deal's bookrunners, wouldn't discuss investor interest. MicroStrategy, which started buying and keeping bitcoin in 2020, is the top corporate holder when software revenue fell in 2022 and 2023.
The corporation bought 15,000 bitcoins since Feb. 15, reaching 205,000 by March 10. Coinbase priced an upsized convertible bond offering of $1.1 billion to repay its convertible debt and notes obligations.
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