S&P Global gives Strategy a "B-" credit rating

According to Foresight News, S&P Global Ratings has given the Bitcoin treasury company Strategy a "B-" credit rating, classifying it as a speculative, non-investment grade category, while noting that the company's prospects remain stable. S&P believes that Strategy has four major weaknesses: high concentration of Bitcoin holdings, narrow business focus, weak risk-adjusted capitalization, and insufficient U.S. dollar liquidity. The Stable Rating Outlook assumes that the company will prudently manage convertible debt maturity risks and maintain preferred stock dividend payments, which may require further debt issuance.

In addition, Strategy faces "inherent currency mismatch risk" as all of its debt is denominated in U.S. dollars and most of its U.S. dollar reserves are used to support the company's software business. Although the company retains some U.S. dollar balances on its balance sheet, the cash is mainly used to support the operations of its software business, and all excess cash is invested in Bitcoin. This centralized allocation of Bitcoin also exposes Strategy to potential regulatory risks, and policy changes in how Bitcoin is handled could adversely affect its business model.

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