Strategy Becomes First Bitcoin Treasury Firm Rated by S&P Global
S&P Global Ratings has given Strategy (MSTR) a B- credit rating, placing it firmly in speculative, non-investment-grade territory — commonly referred to as junk status.
The assessment shows what S&P calls the “increased default risk” tied to the company’s bitcoin-focused balance sheet, despite its sizable market capitalization and continued access to capital markets.
Strategy share price (Source: Google Finance)
A B- rating falls several notches below the lowest investment-grade mark of BBB, signaling that while the company’s outlook is stable, its reliance on Bitcoin makes its financial profile inherently volatile.
Also read: Strategy Earns Citi Buy Rating and $485 Target on Bullish Bitcoin Outlook
Bitcoin Treasury Pioneer
Under Executive Chairman Michael Saylor, Strategy has evolved from a traditional enterprise software firm into what is effectively a publicly traded bitcoin holding company.
The firm channels nearly all of its free cash flow into buying Bitcoin and funds those purchases with convertible debt, preferred stock, and equity issuance.
Saylor hailed the rating as a historic milestone, noting that the company is the first bitcoin-treasury firm to receive a rating from a major credit agency.
Industry voices, including KindlyMD (NAKA) CEO David Bailey, echoed the sentiment, suggesting that this could mark the beginning of institutional acceptance of corporate bitcoin treasuries. “The market demand for treasury companies is about to explode,” Bailey said.
Strategy’s Balance Sheet Paradox
As of mid-2025, Strategy’s bitcoin holdings were valued at around $70 billion, compared to roughly $15 billion in convertible debt and preferred equity.
However, S&P cautioned that this apparent strength is misleading, as most of Strategy’s assets are illiquid in U.S. dollar terms.
The agency highlighted a “currency mismatch” — Strategy’s assets are denominated in Bitcoin, but its debts and dividend obligations are in dollars. This means that a sharp BTC downturn or tightening capital markets could force the firm to sell Bitcoin at unfavorable prices to meet obligations.
S&P also pointed to the company’s negative total adjusted capital, stemming from its exclusion of Bitcoin from equity calculations due to volatility. Despite billions in digital assets, that accounting treatment leaves Strategy with a paper capital deficit.
Liquidity and Dividend Risks
Preferred stock dividends remain a notable liability.
Strategy owes over $640 million per year across four preferred equity classes. While the company can defer these payments, doing so would trigger governance consequences, including granting preferred shareholders board representation. Two classes also accrue interest on deferred dividends.
Strategy has indicated that it intends to fund dividend obligations through new equity issuance, rather than liquidating its Bitcoin holdings.
Stable Outlook — for Now
Despite the speculative grade, S&P maintained a stable outlook, citing Strategy’s history of managing debt maturities and maintaining capital markets access. The company’s next significant debt maturity is not due until 2028, giving it some flexibility — provided Bitcoin’s price remains resilient.
BTC price (Source: CoinMarketCap)
S&P stated that a downgrade could occur if liquidity weakens or debt risks increase. An upgrade, however, would depend on a boost in dollar liquidity and reduced dependence on convertible debt — conditions that seem unlikely in the near term.
Ultimately, S&P concluded that Strategy’s fortunes are inextricably linked to Bitcoin’s trajectory. As long as that remains the case, so too will its elevated credit risk.
