Svmuu News: British investment advisor Farside Investors stated that Strategy’s STRC priority product poses structural risks related to its adjustable coupon and price stabilization mechanisms.The STRC is primarily issued at approximately $100, and the mechanism is designed to increase dividends when the price falls below $100 and decrease dividends when the price rises above $100, in order to guide the market price back to that level.
Farside Investors noted that if investor concerns about Strategy’s credit risk rise, the price of STRC could fall, and increasing dividends to prop up the price would add to cash pressure and further undermine investors’ certainty regarding the security’s valuation. STRC recently traded at around $75 before rebounding to $86.
Strategy has launched the Digital Credit Capital Framework, which includes plans to build a U.S. dollar reserve, raise the STRC dividend to 12%, repurchase senior securities at a discount, and authorize the sale of “Bitcoin” to help fund dividends and the reserve.