S&P Slaps Michael Saylor’s Strategy With Junk Rating Over Bitcoin-Heavy Balance Sheet
S&P Global Ratings has given Michael Saylor’s Strategy a “B-” credit rating, a degree thought of junk or speculative grade.
The agency, previously often called MicroStrategy, earned the score as a consequence of its heavy Bitcoin publicity, restricted enterprise diversification and weak greenback liquidity. S&P stated the outlook for the corporate stays steady.
The score makes Strategy the primary Bitcoin treasury firm to obtain a proper credit score grade from a serious company. Strategy, which has rebranded from a software program agency right into a Bitcoin holding firm, makes use of proceeds from fairness and debt issuance to buy and maintain the cryptocurrency as a part of its treasury technique.
Heavy Bitcoin Holdings Leave Strategy Vulnerable to Price Swings and Policy Shifts
S&P indicated that Strategy’s focus in Bitcoin is each its defining power and its best vulnerability. The firm’s steadiness sheet is sort of solely uncovered to the digital asset, leaving it extremely delicate to market volatility and potential regulatory adjustments.
The score company additionally famous a structural mismatch, since Strategy’s debt and most well-liked inventory obligations are denominated in US {dollars}, whereas most of its belongings are held in Bitcoin.
As of June 2025, the corporate held roughly $70b price of Bitcoin, whereas complete convertible debt stood at about $8b, maturing from 2028 onward. S&P stated Strategy’s skill to handle its debt maturities by capital market entry is a key issue behind the steady outlook.
Analysts Cite Structurally Thin Cushion as Bitcoin Assets Dominate Company Valuation
Still, analysts flagged that the corporate’s adjusted capital place stays “considerably unfavourable.” Since S&P deducts Bitcoin belongings from fairness when calculating adjusted capital, Strategy’s heavy crypto publicity ends in a structurally weak capital base.
The firm’s risk-adjusted capital ratio was deeply unfavourable in mid-2025, pushed by the volatility and non-yielding nature of its holdings.
Strategy’s core software program enterprise, which supplies enterprise analytics instruments, stays marginally worthwhile and contributes little to working money circulate. For the primary half of 2025, the corporate reported a unfavourable $37m in money circulate from operations, whereas its pre-tax earnings of $8.1b had been virtually solely as a consequence of Bitcoin value good points.
S&P Says $80B Market Cap Reflects Investor Appetite Despite Concentrated Bitcoin Risk
S&P additionally cited cybersecurity as a fabric danger. Strategy holds Bitcoin by a number of institutional custodians, however insurance coverage protection represents solely a small fraction of its complete holdings. The company stated any lack of personal keys or custodial failure might considerably impair the corporate’s liquidity place.
Despite these weaknesses, S&P credited Strategy with disciplined debt administration and robust entry to capital markets. The firm has persistently refinanced its obligations by convertible debt and fairness issuance, avoiding near-term maturities. Its market capitalization stands at roughly $80b, reflecting investor urge for food for publicity to Bitcoin by conventional securities.
Stable Outlook Hinges on Access to Capital Markets and Dollar Liquidity Improvements
S&P stated the corporate’s liquidity profile is strained by most well-liked fairness dividends totaling greater than $640m yearly, though these funds are small relative to its complete Bitcoin holdings.
The firm can defer these dividends, however doing so would carry governance penalties, together with granting most well-liked shareholders board illustration.
Looking forward, S&P stated an improve is unlikely within the subsequent 12 months however might happen if Strategy improves its greenback liquidity and reduces reliance on convertible debt. A downgrade, nonetheless, might observe if the corporate loses market entry or faces extreme Bitcoin value declines.
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