Nine Months In, STRF Stands Out as the Strategy’s Leading Credit Vehicle

Strategy’s (MSTR) senior perpetual preferred stock, STRF, continues to separate itself from the rest of the company’s capital structure, attracting investor interest as the most resilient credit instrument since its March debut. The security has rallied 20% from its November lows, a rebound that has outshone the performance of Strategy’s junior preferred issues.

Currently priced around $110, STRF has gained 36% from issuance and recovered sharply from its Nov. 21 low of $92. That same date marked bitcoin’s local trough near $80,000, reinforcing the strong directional correlation between the two.

As the highest-ranking preferred instrument, STRF offers a 10% fixed annual cash dividend, governance features, and penalty-triggered coupon step-ups if the company misses payments. Even with its premium valuation reducing the effective yield to about 9.03%, the issue remains in high demand thanks to its seniority and long-dated credit characteristics.

In late October, Executive Chairman Michael Saylor drew attention to the widening credit spread between STRF and the junior STRD. Investors demanded a 12.5% higher yield to hold the riskier security, and at the Nov. 21 market stress point, the spread pushed to a record 1.5 as capital moved aggressively into senior exposure. STRD briefly traded as low as $65 before the spread eased back to roughly 1.3.

Divergence is also emerging elsewhere in Strategy’s preferred lineup. The mid-tier STRC has required four dividend increases in recent months to keep investor demand stable.

Strategy’s common equity has rebounded as well, climbing from its Dec. 1 low of $155 to about $185. The recovery reflects improving sentiment toward both the company’s financial footing and the broader bitcoin market, supported by Strategy’s recent move to establish a $1.44 billion cash reserve dedicated to preferred dividend payments.