Strategy, which has become one of the most closely watched publicly traded companies in the crypto market with its Bitcoin treasury, has taken a significant step toward simplifying its debt structure. The company has signed private agreements to repurchase approximately $1.5 billion of its 2029-maturity, 0%-rate convertible senior bonds. Strategy expects to pay approximately $1.38 billion in cash for this transaction. However, the final payment amount will be determined after the share price-dependent settlement period is completed. According to Strategy's Form 8-K filing with the U.S. Securities and Exchange Commission, the agreements were made with selected bondholders on May 14th. The transaction is expected to be completed on May 19th, provided the usual closing conditions are met. Following the closing, the company will cancel the repurchased bonds. Thus, approximately $1.5 billion of debt from the same 2029-maturity bond group will remain in the market. This step is considered one of the first major moves in Strategy's plan to reduce its growing debt burden in recent years. The company has previously used convertible bonds, stock sale programs, and various types of preferred share issuances to finance its Bitcoin purchases. Therefore, the buyback decision doesn't just mean reducing a single debt item; it also signals a rebalancing of Strategy's broader capital structure.
How will Strategy finance the debt buyback?
One of the most striking points in the document is that the company explicitly listed Bitcoin sales among the resources it could use for the buyback. Strategy stated that it could make payments with its existing cash reserves, proceeds from the sale of shares in the market, cash from the sale of securities, and/or proceeds from the sale of Bitcoin. This statement attracted particular attention in the market due to Michael Saylor's long-standing "no selling Bitcoin" approach. Strategy is the largest player in the sector in terms of institutional Bitcoin accumulation, and the value of the Bitcoin assets held by the company is estimated at approximately $65 billion. Therefore, the company's potential Bitcoin sale is closely watched not only from a balance sheet management perspective but also from a market psychology perspective. Saylor had previously stated that the company aimed to transform its convertible bonds into an equity-heavy structure over a period of three to six years. This strategy involves reducing debt and securing financing through a larger equity or preferred stock structure. The repurchase of bonds maturing in 2029 is a concrete part of this plan.
STRC Volume Hits Record
One of the prominent instruments in Strategy's capital structure is its STRC preferred stock, known as Stretch. The company's STRC product stands out with its perpetual preferred stock structure that makes monthly payments and offers an annual cash dividend yield of 11.5 percent. On Thursday, STRC trading volume reached a record high of $1.53 billion. This volume was more than four times the 30-day average of $331 million.
The intense trading activity in the market is said to have strengthened Strategy's capacity to raise capital through the market. According to BitcoinQuant, this trading volume helped the company finance the purchase of approximately 11,707 Bitcoins. The majority of STRC transactions occurred at or above the $100 nominal value level during the day. Friday being the dividend payout date for STRC was also among the factors that increased trading volume.
However, STRC's high dividend structure keeps the pressure on Strategy's long-term cash flow and debt management on the agenda. The company's continued accumulation of Bitcoin and its maintenance of preferential share dividends make its access to capital markets even more important.
A new era for Bitcoin treasury
Strategy shares traded at around $178 after the opening on Friday. Although the stock has risen by approximately 18 percent since the beginning of the year, it remains well below the $457 peak seen last year. This shows that investors continue to be interested in the company's Bitcoin strategy, but are also closely monitoring its debt and dividend obligations. The company's decision to repurchase its 2029-maturity bonds reveals that Strategy is not only pursuing an aggressive institutional treasury model focused solely on Bitcoin accumulation, but is also attempting to readjust the financing side of that model. Once the repurchase is complete, $1.5 billion in debt will remain from the same bond portfolio. Additionally, the company holds approximately $1 billion in other bonds that investors may be forced to repurchase as early as September 2027.
