TLDR
- S&P Global assigns a B- credit rating to Strategy, categorizing it as a junk bond.
- The rating reflects Strategy’s high concentration in Bitcoin and weak capitalization.
- S&P highlights the Strategy’s currency mismatch between Bitcoin reserves and US dollar debt.
- Strategy faces challengesin managing convertible debt maturities and maintaining liquidity.
- Despite the rating, Strategy’s stock performed well in 2024 with a 430% rise.
- S&P warns that Strategy may be forced to sell Bitcoin at depressed prices if its debt obligations become difficult to meet.
S&P Global has given Strategy a B- credit rating, placing the company in speculative, non-investment-grade territory. The rating means Strategy falls into the “junk bond” category. S&P Global’s outlook on Strategy remains stable despite this rating.
S&P Cites Weaknesses in Strategy’s Business Model
S&P Global pointed out several weaknesses in Strategy’s business model. The company’s heavy reliance on Bitcoin, weak risk-adjusted capitalization, and low US dollar liquidity were key concerns. “We view Strategy’s high bitcoin concentration and narrow business focus as weaknesses,” the credit rating platform stated.
The rating also reflects the company’s “inherent currency mismatch,” according to S&P Global. Strategy’s debt is due in US dollars, while a large portion of its reserves are tied up in Bitcoin. Furthermore, its software business operates at breakeven in both earnings and cash flow.
Strategy Faces Debt Management Challenges
Strategy’s treasury has accumulated 640,808 BTC primarily through equity and debt financing. S&P Global highlighted the challenge of managing convertible debt maturities while maintaining preferred stock dividends. The credit rating platform expects the company to manage this carefully, possibly through further debt issuance.
The outlook assumes that Strategy will prudently handle these debt obligations, maintaining its liquidity. However, S&P Global cautioned that if Strategy fails to ease convertible debt or improves liquidity, its credit rating could be at risk. In extreme scenarios, the company might be forced to sell Bitcoin at depressed prices.
Rating Places Strategy in Junk Bond Category
This rating marks the first time a Bitcoin-treasury company has received an S&P Global assessment. S&P Global’s decision sets a benchmark for traditional finance to evaluate companies focused on Bitcoin. Previously, the company issued the same B- rating to Sky Protocol (formerly MakerDAO).
Despite the negative rating, Strategy’s stock has performed well. It was one of the Nasdaq’s best performers in 2024, rising 430%. However, in 2025, Strategy’s stock has retraced 13% according to Google Finance data.
S&P Global’s rating did not impact the company’s stock price negatively on Monday. Strategy’s share price rose by 2.27% on that day. S&P Global noted that an upgrade in the next 12 months is unlikely unless there are substantial improvements in liquidity and debt management.
The credit rating agency also warned that a severe downturn in Bitcoin’s price could create challenges for Strategy. If Bitcoin faces significant stress, Strategy may be forced to liquidate assets to meet debt obligations. This scenario would negatively affect the company’s financial stability.
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