In a recent assessment, S&P Global Ratings has assigned Michael Saylor’s company, Strategy, a credit rating of “B-,” categorizing it within the speculative, non-investment-grade range often associated with “junk bonds.” Despite this rating, which indicates certain financial vulnerabilities, the outlook for the company remains stable according to the rating agency.
The credit evaluation emphasized several weaknesses in Strategy’s financial structure. These include a high concentration in Bitcoin holdings, a limited business focus, weak risk-adjusted capitalization, and low liquidity in U.S. dollars. Strategy has built a substantial treasury of 640,808 BTC primarily through various equity and debt financing methods. The stable outlook presumes that the company will manage its convertible debt obligations sensibly and keep preferred stock dividends intact, possibly through further debt issuance.
One of the critical concerns highlighted by S&P Global is the “inherent currency mismatch” faced by the company. All of Strategy’s debt is denominated in US dollars, while a significant portion of its reserves is allocated to support its software business, which currently operates around the breakeven point concerning earnings and cash flow.
Importantly, this rating marks the inaugural instance in which a Bitcoin-treasury-centric company has received an assessment from S&P Global, setting a precedent for traditional finance (TradFi) institutions to evaluate the credit risks associated with businesses built on Bitcoin and cryptocurrency models.
In terms of comparisons, Strategy is rated similarly to Sky Protocol, which is known for its high depositor concentration, centralized governance, and weak capitalization—all factors that contributed to its own B-minus rating assigned in August.
To escape what is termed the “junk bond” zone, Strategy would need to improve its credit rating by six levels, ultimately reaching a score of BBB-minus. This latest evaluation comes after a significant performance trend, with Strategy being recognized as one of the best-performing stocks on Nasdaq in 2024, surging by 430%. Nonetheless, the company has faced a retracement of about 13% in 2025 thus far, despite a 2.27% rise on the day the rating was announced, suggesting that the rating did not negatively impact investor sentiment immediately.
Looking ahead, S&P Global has suggested that an upgrade of the rating in the next year seems unlikely. However, the agency indicated that a higher rating could be achievable if Strategy improves its dollar liquidity, mitigates convertible debt reliance, and continues to show strong access to capital markets, even as Bitcoin’s value fluctuates. Conversely, the risk remains that if convertible debt matures during a time of significant Bitcoin market stress, the company may be compelled to sell some of its Bitcoin holdings at reduced prices. This situation could further jeopardize Strategy’s standing, especially if its ability to access capital markets weakens, impacting its ongoing Bitcoin-driven strategy.
