LONDON (IT BOLTWISE) – Michael Saylor’s Bitcoin treasury company has been given a B- credit rating by S&P Global. This junk bond classification reflects the risks associated with Bitcoin’s high concentration and narrow business strategy.
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Michael Saylor’s company, which specializes in Bitcoin treasury, recently received a B- credit rating from S&P Global Ratings. This classification falls into the category of speculative, non-investment bonds, often referred to as junk bonds. Despite this valuation, the outlook for the company remains stable, suggesting cautious management of debt and dividends.
S&P Global Ratings highlights Bitcoin’s high concentration, narrow business strategy, weak risk-adjusted capitalization and low US dollar liquidity as the company’s weaknesses. The company has accumulated its 640,808 BTC primarily through equity and debt financing. The stable outlook is based on the assumption that the company prudently manages its convertible debt maturities and maintains preferred dividends, possibly by raising additional debt.
Another risk is the inherent currency imbalance, as all debt is denominated in US dollars, while much of the dollar reserves are used to finance the software business, which roughly breaks even. This situation could force the company to liquidate Bitcoin at unfavorable prices if the debt comes due during a period of severe Bitcoin stress.
S&P Global’s rating is significant because it is the first time a Bitcoin Treasury-focused company has received such a rating. This creates a benchmark for traditional financial institutions to assess the credit risk of companies that base their business model on Bitcoin and cryptocurrencies. The company will need to increase its US liquidity and reduce reliance on debt to achieve a potential upgrade.
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