Summary
- STRC is structured as a perpetual preferred stock with no maturity date for principal repayment, leaving it continuously exposed to liquidity and interest-rate risk.
- As Strategy expands preferred stock issuance to fund Bitcoin purchases, STRC’s daily trading volume reached $1.5 billion, a record high.
- STRC has an approved issuance limit of about $28 billion, a market capitalization of about $8.4 billion, and an 11.5%% dividend yield, while trading at about $99 a share.
Forecast Trend Report by Period
Investors may be underestimating the risks in Strategy’s variable-rate Series A perpetual Stretch preferred stock, STRC, according to an analysis.
Matt Dines, chief investment officer at credit asset manager Build Markets, told TFTC that STRC remains exposed to liquidity and interest-rate risk because it is a perpetual preferred stock with no maturity date for principal repayment, Cointelegraph reported on May 17. Investors would have to sell in the secondary market to recover their money.
Dines said perpetual preferred shares also carry indefinite duration risk if the market begins demanding higher yields from corporate borrowers. If a liquidity mismatch emerges, the shock would show up in fiat markets, he added.
The comments come as demand for STRC grows. Cointelegraph reported that STRC’s daily trading volume reached a record $1.5 billion as Strategy expands preferred stock issuance to finance Bitcoin purchases.
Crypto research firm Delphi Digital said STRC has an authorized issuance limit of about $28 billion. The total par value of outstanding issuance stands at $8.5 billion, while its market capitalization is about $8.4 billion. STRC is trading at about $99 a share with an 11.5% dividend yield. Strategy is also voting on a proposal to pay dividends twice a month to holders of its common stock and STRC.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.
