TLDR
Strategy’s USD reserve dropped sharply after the company used cash to repurchase zero-coupon convertible debt.
The company paid about $1.38 billion to retire $1.5 billion in principal notes due in 2029.
The reserve fell from $2.188 billion at the start of 2026 to about $871 million after the buyback.
Strategy originally described the cash reserve as support for preferred dividends and debt interest payments.
The company may rebuild the reserve through more MSTR common stock and STRC preferred stock sales.
Strategy’s USD reserve has fallen sharply after the company used cash to repurchase zero-coupon convertible debt instead of preserving it mainly for preferred dividends.
Strategy said in December that it created a $1.44 billion cash reserve to support preferred stock dividends and interest payments on outstanding debt. The company described the reserve as separate from its Bitcoin holdings, which Chairman Michael Saylor has often treated as the company’s main treasury asset.
President and CEO Phong Le said at the time that the cash position covered 21 months of dividend payments. By late December, additional stock sales had lifted the reserve to about $2.19 billion, according to company disclosures cited in the report.
The reserve gave preferred shareholders a cash cushion across Strategy’s STRC, STRK, STRF, and STRD securities. Common shareholders funded that cushion through at-the-market sales of MSTR stock.
Strategy’s USD Reserve Drops After Debt Buyback
In May 2026, Strategy used a large part of that reserve for a different purpose. The company repurchased $1.5 billion in principal amount of its 0% Convertible Senior Notes due 2029 between May 11 and May 25.
According to Strategy, the company paid about $1.38 billion because the notes traded below face value. The repurchase saved about $120 million against the principal amount, based on the company’s reported figures.
The notes did not carry ongoing interest costs. Strategy issued the original $3 billion debt package in November 2024 with a conversion price of $672.40 per MSTR share.
MSTR has traded far below that conversion level in recent months, according to the report. The company confirmed that Strategy’s USD reserve funded the buyback.
After the transaction, Strategy’s USD reserve declined from $2.188 billion at the start of 2026 to $871 million. The report said this represented a 63% drop in the cash reserve.
The drop changed the preferred dividend coverage profile. Strategy’s four dividend-paying preferred stock series now carry more than $1.7 billion in yearly obligations, according to the report.
At the start of 2026, the reserve covered more than two and a half years of dividends. After the buyback, the reserve covered about six months of dividend payments.
CFO Defends Liability Management Move
CFO Andrew Kang described the repurchase as positive for both equity and credit investors. He said the transaction showed Strategy’s continued focus on liability management.
Kang also said the company remains committed to maintaining a strong cash reserve for its Digital Credit securities. According to the report, Strategy plans to rebuild the reserve through more MSTR common stock sales and STRC preferred sales.
That plan again places common shareholders near the center of the funding process. MSTR closed Wednesday at $154.20, down 58% over the past 12 months, according to the report.
Strategy’s latest reserve use has raised questions about how the company balances preferred dividend support, debt reduction, and shareholder dilution.
The company originally presented Strategy’s USD reserve as a cash buffer for preferred dividends and interest costs. Its May debt repurchase shows that management can also direct that cash toward liability management.
Preferred shareholders still have a reserve behind their dividends, but the cushion now stands far below its year-start level. Common shareholders may fund its rebuilding through new share sales.
