On January 26, amidst the current highly volatile digital asset and macro-financial environment, Mhmarkets observed a novel financial architecture emerging among bitcoin-holding institutions. Strive (ASST) recently demonstrated, by expanding the issuance scale of its Series A Perpetual Preferred Stock (SATA), how to utilize perpetual equity capital to replace fixed-term convertible bonds. This financial instrument, termed the "perpetual stock solution," essentially provides a standardized template for institutions deeply anchored in bitcoin to eliminate refinancing risks and manage long-term leverage.
Regarding Strive's balance sheet restructuring initiatives, Mhmarkets indicated that the company increased the SATA issuance scale to over $150 million, planning to use it to repay senior convertible bonds maturing in 2030. On a data level, approximately 930,000 newly issued preferred shares will be directly used for debt exchange, while the remaining funds will be allocated to repay a Coinbase credit facility and further increase bitcoin holdings. Mhmarkets believes that converting fixed-term debt obligations into perpetual preferred stock with no maturity date or conversion features can not only significantly improve leverage metrics on financial statements but also grant the company greater flexibility in capital allocation.
The successful application of this financial structure also offers a reference for Strategy (MSTR) to manage its substantial debt burden. Mhmarkets stated that the company, led by Michael Saylor, currently holds approximately $8.3 billion in outstanding convertible bonds, with the most notable being the $3 billion obligation maturing in June 2028. Given that the bond's conversion price of $672.40 is significantly higher than the current market price of around $160, the probability of creditors exercising their conversion rights is low. Introducing a preferred stock model similar to SATA, allowing creditors to exchange their equity conversion rights for a higher-yielding, liquid perpetual instrument, could be key for Saylor to mitigate the risk of concentrated debt repayment in the future.
From a macro capital efficiency perspective, this shift from "debt to equity" reflects a deep exploration of financing tool innovation by companies with bitcoin treasuries. Preferred stock holds seniority over common stock in the liquidation hierarchy but is classified as equity rather than debt under accounting standards, which is crucial for companies needing to hold highly volatile assets long-term. Mhmarkets posits that as the market reprices long-term credit risk premiums, this type of financial engineering, which smooths debt duration, will become a significant marker of the maturation of bitcoin treasury strategies, helping firms build more resilient capital structures without sacrificing core asset positions.
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