Bankless · Wednesday, July 1, 2026
Jeff Dorman explains that refinancing MicroStrategy's convertible debt is likely to be relatively easy due to the nature of convertible bond investors. However, he cautions that each subsequent refinancing will come with more onerous terms, potentially increasing the company's future obligations.
“I actually think it's pretty easy. You know, as a former debt capital markets investment banker, you know, the joke with all convertible bond buyers is they're not real debt investors, right? Real debt investors look at covenants. They look at the docks. They're very into the weeds in terms of what you're getting. Convertible bond investors, they don't care about the underlying company. They don't even care about the credit, really. They care about the volatility and are they able to ARB it, right? Is the stock liquid enough that they can short it? Are there options markets that you can take? Basically, it's just an ARB market. So a billion dollars of converts is actually very easy to roll, especially with an equity market cap the size.”
“Now, there's always timing considerations to it, meaning like it'll be harder to do, you know, this month, given all of the noise that they've created and all of the negative press around MSTR. But, you know, we talk six months from now, 12 months from now, things are calming down. The preferreds are back in the 90s. Nobody's really that concerned about it. very easy to refinance these.”
“Each time they have to do this, the terms are going to get a little more onerous. They're either going to come at 2% coupons or 3% coupons. And, you know, maybe the conversion ratio is slightly less in MicroStrategy's favor and things like that, but they will be able to do it.”