Morning Commentary: MicroStrategy convertible notes gain on continued Bitcoin rally

By Abigail W. Adams

Portland, Me., Jan. 4 – The convertibles secondary space launched the first trading session of the new year with decent volume.

There was about $75 million on the tape less than one hour into the session.

While the overall market was down, MicroStrategy Inc.’s recently priced 0.75% convertible notes due 2025 rocketed higher on an outright basis alongside stock.

The 0.75% notes were up more than 8 points outright with stock up more than 12%.

The notes were changing hands at 137 early in the session with about $5 million in reported volume, according to a market source.

MicroStrategy’s stock was $435.92, an increase of 12.19%, shortly before 11 a.m. ET.

The 0.75% notes were one of the last offerings to price in 2020. The use of proceeds was to purchase Bitcoin, which sources noted as unusual.

However, since the notes priced on Dec. 8 Bitcoin has seen a massive rally.

While Bitcoin was pulling back early Monday, the cryptocurrency surpassed $34,000 for the first time on Jan. 3.

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