Software firm Microstrategy has raised $1.6 billion in a junk bond offering — four times the amount initially sought.
Junk bonds are loans offered by companies without investment-grade credit ratings, and typically offer high returns to investors while taking on higher risks. Returns between 6.125% and 6.25% have been issued for the bond, assuming the return given by Treasury bonds.
“The Notes will be fully and unconditionally guaranteed, on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy, and certain subsidiaries of MicroStrategy, which will be subject to the termination of the Offering. be created or achieved,” MicroStrategy’s announcement said.
a day later, firm announced It would increase its bond offering to $500 million after it was filled with an order of $1.6 billion.
micro strategy at present holds the most bitcoins Of all the publicly traded companies on its balance sheet, that amounted to a dollar valuation of about $3.2 billion — more than twice the value of Tesla ($1.4 billion) of bitcoin.
The share price of MicroStrategy increased in line with the rising price of bitcoin during 2020 and 2021. But keeping bitcoin on its balance sheet wasn’t enough to stop MicroStrategy’s stock slide, which eventually came as the cryptocurrency market collapsed. Microstrategy’s share price is down 45% since bitcoin peaked in early April.
MicroStrategy also revealed the formation of a new subsidiary, called MacroStrategy LLC, to hold its existing 92,079 Bitcoins.
The reaction to the news on social media was generally varied. Bitcoin supporters celebrated the news, noting the huge increase in demand for the microstrategy’s bonds.
MicroStrategy offers $400 million in bonds to buy more #bitcoin And they got $1.6 billion in interest.
They got 4 times more in demand than what was offered.
— Documenting Bitcoin (@DocumentingBTC) 8 June 2021
Crypto skeptic Peter Schiff questioned the wisdom of buying the historically volatile asset. Schiff asked how the sudden drop in the price of bitcoin would affect microstrategy’s business operations.
I do not think so @michael_saylor Familiar with Murphy’s law. what if #bitcoin Crash below $20K? Will #micro strategy Sell stocks at depressed prices to strengthen your balance sheet? Will it sell bitcoin to raise cash? Will creditors give their bitcoins to HODL if MicroStrategy goes bankrupt?
— Peter Schiff (@PeterSchiff) 8 June 2021
let’s wait and see.