The monthly interest-paying Bitcoin preferred stocks are here! Why are MicroStrategy and Strive turning to interest-heavy preferred stocks?

After MicroStrategy, the Bitcoin reserve company Strive has also begun issuing variable interest rate perpetual preferred shares, boasting monthly dividends, with an initial dividend rate set at 12%. Although preferred shares incur high interest, the lack of a definite maturity date means the company does not have to worry about being forced to liquidate assets to repay principal in a market downturn, making it a more flexible financial tool according to digital asset finance company (DAT).

Strive issuance 12% perpetual preferred stock SATA, boasting monthly dividends

Strive Asset Management, co-founded by Vivek Ramaswamy, has formed a publicly traded Bitcoin asset management company, Strive (stock code: ASST), through a merger with Asset Entities. Strive emulates MicroStrategy's issuance of variable interest rate Series A perpetual preferred stock, SATA, boasting monthly dividends with an initial dividend rate set at 12%, and establishes a dividend reserve fund equivalent to the dividend payments made over the previous 12 months, funded by the company's own cash to ensure investor safety.

The conditions for SATA are as follows:

Monthly Interest ( Interest will be distributed on the 15th of each month, and the interest rate for the next month will be announced ).

Adopt a floating interest rate, with an initial interest rate of 12%.

With a guaranteed interest rate, it shall not be lower than the SOFR rate for 1 month.

Interest can be accumulated

The settlement price is 100 dollars.

The company has the right to redeem at a price of 110 dollars.

By adjusting the interest rate, keep the stock price within the range of 95 to 105.

Why abandon convertible bonds in favor of high-yield preferred stocks?

After MicroStrategy, Strive is the second company to issue perpetual preferred stock backed by Bitcoin. Strive's risk control manager, Jeff Walton, compared the differences between perpetual preferred stock and convertible bonds. Perpetual preferred stock aligns with the long-term characteristics of Bitcoin, providing an unlimited debt term and public tradability, allowing for issuance at market prices, increasing Bitcoin holdings without diluting shareholder equity, except for ( convertible preferred stock ).

Although the preferred shares issued by MicroStrategy and Strive have to bear high Interest, the company does not have to worry about being forced to liquidate assets to repay the principal in a market downturn because there is no clear maturity date. This is viewed as a more flexible financial operating tool by the digital asset financial company (DAT).

However, observing the SATA launched by Strive, although it was oversubscribed, the issuance price was $80 per share, with a discount rate of up to 20%. However, investors enjoy a high yield of 15%. It is uncertain whether this phenomenon is a blessing or a hidden crisis.

Another Bitcoin reserve company in Japan, Metaplanet, has received shareholder approval for the issuance of preferred shares, but it seems that due to low acceptance from Japanese investors, there has been no further progress. As the stock price has fallen, mNAV has also dropped below the level of 1, and the company has not purchased Bitcoin since the end of September.

(Gerovich simulates 8.6 times mNAV stock issuance benefits, can 6% preferred stock save Metaplanet?)

This article discusses the arrival of Bitcoin preferred shares with monthly interest payments! Why are MicroStrategy and Strive turning to interest-heavy preferred shares? First appeared in Chain News ABMedia.