Strategy’s ( MSTR ) senior perpetual preferred stock, STRF, has increasingly emerged as the company’s most successful credit instrument since launching in March.
Trading at $110, STRF is up 36% since issue and is up 20% from its Nov. 21 low of $92. That date also marked bitcoin’s local bottom near $80,000, highlighting the strong correlation between STRF and bitcoin.
STRF occupies the upper part of the Strategy’s preferred structure. It pays a fixed 10% annual cash dividend and has management rights plus penalty-based step-ups if payments are missed. Even with its premium pricing pushing the effective yield down to around 9.03%, demand remains strong due to the security’s senior protection and long-term credit profile.
In late October, executive chairman Michael Saylor highlighted a widening credit spread between STRF and junior STRD. The spread measures the extra return investors demand for holding higher-risk junior securities, which is now 12.5%. At the Nov. 21 low, that gap widened to an all-time high of 1.5 as investors piled into senior exposure, STRD trading as low as $65. The spread has since been normalized to around 1.3.
Divergence is now visible across Strategy’s preferred suite. STRC, has seen four dividend increases to maintain investor interest.
The strategy’s equity has also bounced back, rising from a Dec. 1 low of $155 to around $185, reflecting improved sentiment across both the company’s balance sheet and the bitcoin market since the announcement of a $1.44 billion cash buffer for preferred dividend payments.
