Written by Medha Singh
(Reuters) – MicroStrategy raises funds through convertible note offering to buy Bitcoin for second time within 10 days, as aggressive crypto investors look to increase exposure to the fast-growing cryptocurrency I’m making plans.
The software company announced after the market closed on Wednesday that it would offer $500 million in convertible notes due in 2031 to institutional investors. On March 5, the company announced a private placement of $600 million in convertible notes.
The company’s shares fell 7% on Thursday after hitting a 24-year high in the previous session. The stock price has soared nearly three times as of 2024.
Bitcoin, the world’s largest cryptocurrency, hit a new high of $73,803, marking a year-to-date gain of nearly 70%.
The Tysons, Virginia-based company joins a number of companies offering convertible debt in a high-interest rate environment.
“MicroStrategy is single-handedly demonstrating that there is nothing limiting about the (monetary) policy environment right now,” said Michael O’Rourke, chief market strategist at Jones Trading.
“Since late 2020, the company has brought to market convertible debt offerings and, to a lesser extent, on-market equity offerings, for the specific purpose of investing the proceeds in Bitcoin. It seems like it’s becoming a weekly event.”
Convertible bonds, which can be exchanged for stock when the stock price reaches a certain level, offer companies the option to raise capital at lower interest rates than regular corporate bonds, without the risk of immediate shareholder dilution as with a stock offering. do.
MicroStrategy is selling the bonds at a yield of 0.375% to 0.875%, with an option to convert if the stock price rises 40% to 45% from current levels, according to LSEG IFR data.
The deal managers, Citigroup and Barclays, declined to comment on investor interest in the offering.
MicroStrategy, which began buying and holding Bitcoin in 2020, has become the cryptocurrency’s largest corporate holder as revenue from its software business declined in 2022 and 2023.
The company has purchased 15,000 Bitcoins since February 15th, bringing its total holdings to 205,000 Bitcoins as of March 10th.
Separately, cryptocurrency exchange Coinbase has priced an incremental convertible note offering of $1.1 billion to repay or redeem outstanding convertible notes and maturities.
(Reporting by Medha Singh in Bengaluru; Additional reporting by Lance Tapper and Manya Saini; Editing by Shilpi Majumdar)
