Buy More Bitcoin With MicroStrategy’s Convertible Debt Offer

(CTN News) – MicroStrategy will offer to buy bitcoin for a second time via convertible bonds within 10 days as part of its strategy to expand into the booming cryptocurrency market.

According to a statement issued by the software firm after the markets closed on Wednesday, the company was offering $500 million in convertible notes due in 2031 to institutional investors. On March 5, the company had announced that it would be launching a private offering of convertible notes worth $600 million.

After hitting a 24-year high in the previous session, its shares dropped by 7% on Thursday. Over the course of this year, the stock has surged nearly threefold.

In the last 24 hours, Bitcoin, the world’s most popular cryptocurrency, hit a new record high of $73,803 giving it nearly 70% gains for the year so far.

The Tysons, Virginia-based company has become the latest in a long line of businesses offering convertible bonds during these times of high interest rates.

In his opening remarks, Bitcoin Michael O’Rourke, chief market strategist at JonesTrading, said that MicroStrategy has single-handedly demonstrated to the world that there is nothing restrictive about the (monetary) policy environment at the moment.

It appears that this is now becoming a weekly affair for the company, as they are bringing to the market convertible offerings and to a lesser extent at-the-market stock offerings for the specific purpose of investing the proceeds in bitcoin since late 2020.

When a company issues convertible notes, which can be exchanged for shares when the stock reaches a predetermined level, it is able to raise capital at a lower interest rate than regular bonds, without immediately diluting shareholders in the same way as if it issued stocks.

Based on LSEG IFR data, MicroStrategy is marketing the corporate bonds at an interest rate between 0.375% and 0.875%, with the option to convert when the stock rises forty percent to forty five percent above current levels.

Neither Citigroup nor Barclays, the bookrunners for the deal, responded to requests for comment regarding the interest of investors in the deal.

With revenue from its software business ebbing in 2022 and 2023, MicroStrategy is the largest corporate holder of bitcoins and has begun buying and storing the cryptocurrency in 2020.

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