MicroStrategy, the software and business infrastructure provider recently announced that it would be offering $400 million worth of convertible notes for investors and it would utilize the funds to buy more bitcoin. The firm today revealed that it has upsized the debt offering to $550 million along with the pricing details of their debt security offering.
The latest set of documents revealed that the software giants would offer $550 million at an interest rate of 0.750% per annum in convertible notes to qualified institutional investors. A convertible note is generally used to cash in debt securities in the form of either company shares or liquid cash or a combination of both. Institutional buyers would buy and hold the convertible notes to earn interest on them until the maturity period of December 15, 2025.
MicroStrategy Announces Pricing of Offering of Convertible Senior Noteshttps://t.co/bikLdLqrrZ
— Michael Saylor (@michael_saylor) December 9, 2020
MicroStrategy has already bought nearly $500 million worth of bitcoin in a series of purchases that the firm made this year. However, their decision to raise about $400 million through security debt and use the funds to buy more bitcoin hasn’t really impressed many. In fact, it led Citibank to downgrade its stock from “neutral” to “buy”.
The downgrading of stocks led to a price crash for MicroStrategy stocks seeing a decline of almost 14% from its daily high. However, it seems the downgrade followed by a price crash hasn’t deterred the software giant from their belief in the top cryptocurrency, as they increased their offering by 150 million more.
Preston Pysh, an investment guru was not really impressed with the interest rate of 0.75% and even called it funny. He said,
Who in Sam hell is buying these notes. That interest rate is hilarious. Good for you! Your good standing is why you’re able to do this, but what fools on the other side of the trade…
My lord Michael. Who in Sam hell is buying these notes. That interest rate is hilarious. Good for you! Your good standing is why you’re able to do this, but what fools on the other side of the trade…
— Preston Pysh (@PrestonPysh) December 9, 2020
The criticism for Microstrategy’s over-the-top enthusiasm for bitcoin is mainly coming from mainstream financial circles, however, crypto enthusiast sees this move as a sign of expanding market and a form of Bitcoin ETF until the real one gets approved.
Microstrategy literally becoming the Bitcoin ETF the SEC won’t allow.
— Frank Chaparro (@fintechfrank) December 7, 2020