S&P Global assigns B- rating to Saylor’s Strategy, cites “high bitcoin concentration”

Credit ratings firm S&P Global assigned a B- issuer credit rating to Strategy (NASDAQ: MSTR), the pioneering bitcoin treasury company formerly known as MicroStrategy.

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“Our ratings on Strategy incorporate our view of the company’s narrow business focus, high bitcoin concentration, low U.S. dollar liquidity, and very weak risk-adjusted capital offset, only partially, by Strategy’s strong access to capital markets and prudent management of its capital structure,” the firm said in a report issued Monday.

The rating– considered speculation grade–potentially opens Strategy up to new forms of capital investment, particularly from credit funds interested in high risk, high yield debt.

S&P: Strategy’s bitcoin holdings and credit profile create a currency mismatch

S&P noted that Strategy’s business model – acquiring and holding bitcoin as a reserve asset funded through equity and debt issuance – offers investors indirect exposure to bitcoin without holding it directly.

Strategy also operates a small, roughly breakeven software analytics business. But S&P said Strategy’s bitcoin concentration continues to dominate its credit profile and introduces risks tied to regulatory treatment and market volatility.

The ratings agency emphasized that Strategy’s bitcoin holdings create a currency mismatch: debt and dividends are payable in dollars, while assets are primarily in bitcoin. Any sustained fall in bitcoin prices could strain Strategy’s liquidity and capitalization, the firm notes.

S&P assigns Strategy a negative RAC

When evaluating Strategy’s income-to-capital ratio, S&P deducts Strategy’s bitcoin holdings from equity value because of bitcoin’s “significant market risk.” As a result of this calculation and as of June 30, 2025, S&P notes, Strategy’s negative risk-adjusted capital (RAC) ratio was “significantly negative.”

S&P highlights that Strategy’s cash flow was -$37 million in the first half of 2025, while most of its $8.1 billion in pre-tax earnings during that period came from unrealized gains to its bitcoin treasury. S&P said the company’s assets “do not generate cash flows,” and that it expects this to remain unchanged.

Strategy’s capital structure

Strategy has about $8 billion in convertible debt, with $5 billion currently out of the money and maturing starting in 2028. S&P warned of potential liquidity pressure if bitcoin prices fall before these maturities, which could force the company to sell bitcoin at depressed prices or restructure its debt.

Despite this, S&P acknowledged Strategy’s history of managing debt prudently and noted that its bitcoin holdings—valued at over $73 billion—exceed its debt obligations. The next debt maturity is in 2028, though some notes include a 2027 put option for holders.

S&P also flagged Strategy’s $640 million in annual preferred dividends, which the bitcoin treasury company expects to fund through at-the-market equity sales. While the company could defer dividends, doing so could give preferred holders board representation or higher dividend rates, incentivizing Strategy to continue payments.

Looking forward, the ratings agency said it could lower the rating if bitcoin prices fall sharply or the company’s access to capital markets weakens. Conversely, a higher rating would require stronger dollar liquidity, reduced reliance on convertible debt, and proof of capital markets access even under bitcoin price stress.