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Bond Investors Overpay for Strategy’s Complex Debt Instruments, Study Finds
Bond Investors Overpay for Strategy’s Complex Debt Instruments, Study Finds
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BTCCSquare news:
Sophisticated bond investors may be falling prey to financial engineering, according to a new study. While equity investors correctly price Strategy's shares, bond markets consistently overvalue the company's debt—a phenomenon that creates an intangible 'financing franchise' value.
The research highlights how Strategy's convertible bonds, layered preferred stock, and complex optionality features deliberately obscure risk while emphasizing returns. Michael Saylor's firm appears to capitalize on this opacity, with bond overpayment effectively subsidizing the company's equity valuation premium.
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