Strategy’s Convertible Bonds Rally as Stock Rebounds and Bitcoin Holds Firm
Strategy’s (MSTR) convertible bonds are trading sharply above par as the company’s stock rebounds and Bitcoin maintains strength near record levels. With rising equity prices and favorable sentiment, investors are assigning increasing value to Strategy’s debt tied to future equity conversion.
The company has raised $8.2 billion through six convertible bond offerings, featuring an average coupon of just 0.421%. Five of those bonds are now trading in the money, meaning Strategy’s stock has surpassed their respective conversion prices. Only the 2029 bond, with a conversion threshold of $672.40, remains out of range.
MSTR shares have recovered significantly from a recent low of $235, climbing back to around $450 and approaching their 2024 high of $543. As a result, the market value of Strategy’s convertible debt has soared to $13.4 billion—about $5.2 billion above face value.
These bonds allow holders to convert into equity if the stock price exceeds the set conversion levels, giving them upside exposure to Strategy’s share performance, which is closely tied to Bitcoin’s trajectory.
Despite this favorable trend, the company has not issued new convertible notes recently. Analysts suggest waning market speculation and lower volatility may be contributing factors.
Implied volatility for MSTR has declined to 53.1%, down from highs above 200%. Open interest remains strong at over 2.4 million contracts, though daily options volume has dropped to just 20% of its 30-day average. Put-call ratios suggest a balanced outlook from traders, with no strong bullish or bearish bias.
With less appetite for speculative risk, any future bond issuance by Strategy may require less favorable terms—either higher interest rates or lower conversion prices, which could lead to quicker equity dilution.
Still, the current rally in both Bitcoin and Strategy’s stock continues to benefit existing bondholders, reinforcing confidence in the company’s long-term crypto exposure strategy.
