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MicroStrategy’s Most Recent Bond Drops Below Par as Bitcoin Sells Off

The price on the $500 million bond has fallen by almost three points.

By Frances Yue
AccessTimeIconJun 22, 2021 at 8:35 p.m. UTC
Updated Sep 14, 2021 at 1:15 p.m. UTC
MicroStrategy CEO Michael Saylor.
MicroStrategy CEO Michael Saylor.
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MicroStrategy’s latest bond to finance the company's additional purchase of bitcoin is now trading below its face value as the price of the cryptocurrency continues to decline.

  • Prices on the $500 million bond, which closed on June 15, dropped almost three points after the company said on Monday that it completed its purchase of 13,005 bitcoin at an average price of $37,617. Bitcoin was trading at around $32,780 as of press time.
  • On Tuesday, the price on the bond was trading at 97.75 cents on the dollar, down from 100.62 on Friday, according to Trace, a bond pricing service.
  • Yields were at 6.53% on Tuesday, 40.5 basis points higher than its coupon rate of 6.125%. Bond prices and yields move in opposite directions.
  • The bond, which is due 2028, is guaranteed by the new bitcoin MicroStrategy bought and any other digital assets the company acquires in the future.
  • Meanwhile, another of the Virginia-based software company’s debt instruments, a $1.05 billion convertible bond, was trading at at 68.76, down from 74.23 on Friday.  
  • If bitcoin’s price remains at its current level of $32,668, the company will need to write down roughly $64 million for its recent bitcoin purchase. 
  • At last count, MicroStrategy held 105,085 bitcoin. The company has so far issued more than $1.5 billion in convertible notes and junk bonds to fund purchases of the cryptocurrency. 
  • MicroStrategy's stock also took a hit Tuesday, with shares trading down 4% as of press time.

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