S&P Global Ratings gives Michael Saylor’s Strategy a “B-” credit rating, categorizing it as a speculative, non-investment-grade “junk bond.” The company’s outlook is stable, but weaknesses include high bitcoin concentration and low US dollar liquidity. Strategy must manage debt maturities and maintain preferred stock dividends to maintain its rating.

This marks the first time a Bitcoin-treasury-focused company like Strategy has received an S&P Global assessment, setting a benchmark for evaluating the credit risk of crypto-centric companies. Strategy shares the same rating as decentralized stablecoin issuer Sky Protocol, with both companies facing challenges in capitalization and governance.

For Strategy to move out of the “junk bond” territory, its B- rating will need to improve by six levels to BBB-. Despite S&P Global’s rating, Strategy was one of Nasdaq’s best-performing stocks in 2024, showing a 430% rally. The company’s share price didn’t seem to be affected by the rating, with a 2.27% rise on Monday.

S&P Global believes Strategy’s rating is unlikely to upgrade in the next year unless the company improves US dollar liquidity, reduces convertible debt, and shows continued access to capital markets during Bitcoin retracements. There’s a risk of forced Bitcoin liquidation at low prices if convertible debt is due during a severe Bitcoin stress period, potentially leading to a lower credit rating for Strategy.

Read more at Cointelegraph: S&P Global Hits Strategy With B- Credit Rating