MicroStrategy is one of the loudest crypto advocates on Wall Street. Now the company, led by Michael Saylor, is participating in one of the first corporate bond sales, which specifically provides the proceeds for Bitcoin purchases.
MicroStrategy’s strategy? Buy the dip
After the company originally planned to issue $ 400 million of the debt, the company saw immense demand by the time the deal started on Monday. Saylor and his team decided to increase that amount to $ 500 million with the sale of junk bonds on Tuesday. These type of bonds generally offer more aggressive returns while taking a higher risk of default. The secured notes were reportedly sold at 6.125% yield, up 6.25% and 6.5%, respectively, after previous price discussions. The investment bank Jeffries led the offer.
The news comes after a bevy of Bitcoin purchases this first half of the year. Earlier this year, MicroStrategy pegged 20,000 BTC with a hefty price tag of over $ 1 billion. The company snagged a few hundred more in the past few weeks at around $ 55,000 per coin. After a weekend at the Bitcoin 2021 Conference in Miami, Saylor is ready for more.
To date, the company owns over 90,000 BTC with an average price of just under $ 25,000 per coin. Nonetheless, Bitcoin’s decline in the second quarter is evident; MicroStrategy reported in a filing in its next earnings report this week, a profit of around a quarter of a billion dollars due to the fluctuating price of the cryptocurrency. After Saylor has issued convertibles in the past to make crypto purchases, Saylor appears to be buying the dip with this first corporate bond sale.
Related reading | There’s no chance Bitcoin will be replaced, says Saylor
Corporate bonds that grab attention
This is not the first “first” from MicroStrategy. The company was also one of the first to pay its board in Bitcoin, and Saylor was the first to be run with a modified corporate strategy to integrate Bitcoin. Saylor’s hyper-fixation on Bitcoin in particular has drawn some critics, but other than that, MicroStrategy’s business intelligence products are still doing well with sizeable Fortune 500 clients in their wheelhouse.
Another distinguishing feature of this week’s bond offering is that it was not only the first of its kind, but also because of the response it drew. The company increased its offering to $ 500 million in notes, but received more than $ 1.5 billion in orders for the offering – reportedly including a large number of hedge funds. Despite the recent Bitcoin dip, many major investors still seem to be chewing on it. The coming weeks could be particularly illuminating from her aggressive perspective.
MicroStrategy has come back to earth after yielding substantial attention earlier this year with Bitcoin purchases. | Source: $MSTR-NASDAQ on TradingView.com
Related reading | Saylor: North American Bitcoin miners form coalition after meeting with Elon Musk
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