S&P assigns Strategy B- junk rating, Bitcoin risk cited

S&P Global Ratings has initiated coverage on Strategy Inc with a ‘B-’ long‑term issuer credit rating and a stable outlook. In its research update, S&P frames Strategy as a Bitcoin treasury company whose securities give investors exposure to bitcoin via common stock, preferred equity and convertible notes.

The agency views the firm’s narrow business model, very weak risk‑adjusted capital under its methodology, and limited dollar liquidity as key weaknesses, only partly offset by strong access to capital markets and the absence of near‑term debt maturities.

S&P highlights the inherent currency mismatch in Strategy’s model: the company is long BTC while most obligations – convertible‑debt coupons and preferred‑stock dividends – are payable in USD. Because S&P’s capital model heavily discounts or deducts Bitcoin from equity when calculating adjusted capital, the firm’s risk‑adjusted capital ratio is significantly negative, a principal constraint on the rating. The agency also notes operational risks around custody and key management, with insurance covering only a small fraction of holdings, though mitigated by institutional‑grade custodians and contractual liability provisions.

The stable outlook assumes Strategy will continue to manage maturities prudently (no maturities within 12 months) and maintain market access to refinance or fund obligations via equity, preferreds and/or additional debt. S&P flags potential downside if Bitcoin prices drop sharply and capital‑markets access deteriorates, or if risks around out‑of‑the‑money converts due from 2028 (with a 2027 put) rise. An upgrade would likely require stronger dollar liquidity, reduced reliance on converts, and demonstrated market access through a BTC downturn.

What ‘B-’ means in plain English. On S&P’s scale, ‘B’‑category issuers are more vulnerable to adverse business and economic conditions but currently have the capacity to meet obligations; the ‘-’ modifier places Strategy at the low end of ‘B’, firmly speculative grade (“junk”) and six notches below investment grade (BBB-). In practice, it signals high risk/high beta, with borrowing costs and equity volatility heavily tied to Bitcoin.

Michael Saylor cast the move as a milestone – the first major‑agency rating of a Bitcoin Treasury Company. That upbeat framing drew mixed reactions given the grade is firmly speculative at B- (junk). Even so, it fits Strategy’s repositioning: leaning into a bitcoin‑reserve core with a much smaller AI‑analytics arm.

As GNcrypto reported earlier, when Strategy missed out on S&P 500 inclusion despite appearing to meet the index’s eligibility screens (with Robinhood securing the slot instead), the snub highlighted how traditional gatekeepers remain cautious toward companies functioning as de‑facto Bitcoin proxies. Today’s B‑ from S&P fits the same narrative arc: mainstream institutions will rate and monitor Strategy, but they are not yet prepared to treat it like a diversified cash‑flow issuer. For investors, both episodes point to higher beta, intermittent index‑flow headwinds, and a thesis still anchored more to BTC performance than to the firm’s smaller AI‑analytics business.