Strategy has pushed its net leverage to nearly zero after building a $6.69 billion liquidity cushion, strengthening the balance sheet of the largest publicly traded Bitcoin treasury company.
Strategy calculates net leverage by subtracting its dollar holdings from roughly $6.75 billion of debt and dividing the remaining balance by the market value of its Bitcoin reserve, which is currently around $66 billion.
The company has spent recent months raising capital to expand its U.S. dollar reserves. Its main reserve now stands at about $5.1 billion, providing coverage for nearly four years of preferred-stock dividends, which cost roughly $1.7 billion annually.
Strategy has also set aside a separate $1.59 billion cash pool that can be used for other corporate requirements.
Executive Chairman Michael Saylor said the company’s dollar liquidity forms part of its digital credit framework and can support Bitcoin purchases, preferred dividends and interest, share repurchases, convertible debt repayments and further growth of its cash reserve.
STRC Still Trades Below $100 Par
Strategy’s variable-rate perpetual preferred stock, STRC, has recovered more than 35% from its June low and recently traded around $97.23. Despite the rebound, the shares remain below their $100 par value.
The recovery has been supported by Bitcoin’s climb toward $80,000 and Strategy’s continued repurchases of STRC below par.
Strategy’s debt position also sets it apart from Strive Asset Management, a competing Bitcoin treasury company that eliminated its debt earlier this year. This is important because creditors rank ahead of preferred shareholders when claims are distributed under the corporate capital structure.
Strive’s SATA perpetual preferred shares have recovered to the $100 par level, allowing the company to resume issuing shares through its at-the-market program last week.
Strategy previously reduced its debt load in May by buying back $1.5 billion of convertible notes that were scheduled to mature in 2029. Additional debt reduction would further improve STRC’s standing in the capital structure.
For now, Strategy’s large dollar reserves, continued STRC repurchases and Bitcoin’s recent recovery could provide further support for the preferred stock and help it move closer to its $100 par value.
