S&P hits Strategy with B- ‘junk bond’ rating, citing narrow Bitcoin focus

S&P Global Ratings assigned Michael Saylor’s Strategy a "B-" credit rating, placing it in the speculative, non-investment-grade territory, often called a "junk bond," though the outlook remains stable. S&P cited weaknesses including Strategy's high Bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low US dollar liquidity. Strategy funds its 640,808 BTC treasury primarily through equity and debt financing. The stable outlook hinges on the company prudently managing convertible debt maturities and maintaining preferred stock dividends. S&P noted an "inherent currency mismatch," as debt is due in US dollars while reserves fund the software business, which operates near breakeven. This rating is significant as it establishes a benchmark for TradFi to assess Bitcoin-treasury-focused companies; Strategy received the same B- score as Sky Protocol. To escape the "junk bond" zone, Strategy needs a six-level upgrade to BBB-minus. An upgrade is unlikely in the next 12 months, but S&P noted it could occur if Strategy improves US dollar liquidity, eases convertible debt, and maintains strong capital market access, even during Bitcoin downturns. A downgrade could occur if capital market access weakens or if convertible debt matures during a period of severe Bitcoin stress, forcing asset liquidation at low prices.

(Source：Cointelegraph)