Strategy’s (MSTR) senior perpetual preferred STRF has increasingly become the company’s most successful credit vehicle since its launch in March.
STRF is trading at $110, up 36% since its launch, and has rebounded 20% from its Nov. 21 low of $92. The date also marked a local bottom for Bitcoin near $80,000, highlighting the strong correlation between STRF and Bitcoin.
STRF occupies the top level of Strategy’s preferred structure. It pays a fixed 10% annual cash dividend and has governance rights and penalties if payments are missed. While its premium has pushed the effective yield down to around 9.03%, demand remains strong due to the security’s senior protection and long-term credit profile.
In late October, executive chairman Michael Saylor highlighted the widening credit spreads between STRFs and junior STRDs. The spread, which measures the extra return investors require to hold riskier junior securities, currently stands at 12.5%. At the Nov. 21 low, the gap widened to an all-time high of 1.5, with STRD trading as low as $65 as investors piled into senior exposure. The spread has since normalized to around 1.3.
Now, there’s a clear divide in Strategy’s preferred suite. STRC has raised its dividend rate four times to maintain investor interest.
Strategy shares have also rebounded, climbing to around $185 from a low of $155 on December 1, reflecting improvements in the company’s balance sheet and Bitcoin market sentiment since announcing a $1.44 billion cash buffer for preferred dividend payments.
