MicroStrategy Bonds Likely to Convert After 390% Share Jump
- Bitcoin rally has lifted software firm that owns crypto assets
- Costs to buy back bond have surged; MicroStrategy is cash-poor
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Crypto investor MicroStrategy Inc. is caught in a bind, as Bitcoin’s recent rally has lifted not only its shares, but also its convertible bonds. With the cost of refinancing up by 280%, investors are bracing for the firm to convert the bonds into stock instead.
MicroStrategy’s $650 million convertible bonds due 2025 now trade at around 3.8 times par value as the underlying share price trades well above the conversion price of $397.99, even though the bonds offer just a 0.75% coupon. Convertible bonds are a form of debt that under certain conditions can be paid back with new shares.