Zero-coupon convertible notes were repurchased at 92 cents because they had no coupon and could be repaid in two years, making 92 cents today comparable to a dollar later after accounting for interest rates. The payment was viewed as fair value, but it reduced cash available to earn interest and to support other obligations. The buyback consumed more than 60% of a liquidity cushion raised to fund an 11.5% yield on Stretch preferred stock without selling Bitcoin. The preferred instrument carries a perpetual dividend obligation, with a variable rate around 11.25% and a balance of about $3.4 billion. Strategy holds a large Bitcoin position and reports cash and debt figures that frame the liquidity risk.
"The notes did not mature for another three years, although bondholders could demand repayment in two years, in June 2028. Because the paper carried no coupon, 92 cents today is roughly what a dollar two years out is worth once you account for money market rates. As Schiff put it, "The notes are only worth 92 cents because there's no interest for 2 years. If you give me 92 cents today, that's better than giving me a dollar in 2 years because I could take the 92 cents and I can earn interest on that."""
"Strategy paid fair value and gave up the interest it was already earning on those dollars. The deeper concern is what the buyback consumed. It ate more than 60% of the liquidity cushion the company had raised specifically to fund the 11.5% yield on its Stretch preferred stock without having to sell Bitcoin. The variable rate on STRC currently sits at 11.25%, and the instrument has grown to $3.4 billion. That dividend is a perpetual obligation. The cushion was the firewall."
"Strategy raised $25.3 billion of capital in 2025 and was the largest U.S. equity issuer for the second consecutive year. It sits on 713,502 bitcoins as of early February 2026. Q1 2026 balance sheet data shows $2.21 billion in cash against $8.26 billion in total debt and intangibles of $51.65 billion, which is essentially the Bitcoin stack at fair value."
Read at 24/7 Wall St.
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