Strategy Preferred Stocks Dominate US Market with $7B Issuance and Unique Tiered Structure

TLDR:

• Strategy’s $7 billion preferred issuance represented one-third of total US preferred stock market in 2025 
• STRC trades $150 million daily, offering 4.5% daily liquidity versus typical illiquid preferred markets 
• Yield spreads between STRF and STRD range from 2% to 5%, functioning as investor fear index for securities 
• $2.25 billion USD reserve stabilized STRC near par value despite recent Bitcoin price volatility and declines

Strategy preferred stocks have emerged as a dominant force in the preferred equity market. The company issued $7 billion in preferred securities during 2025.

This volume represented one-third of all preferred stock issuances in the United States. The firm launched five distinct preferred instruments over the past year. Each security offers different risk profiles and yield characteristics for investors.

Structural Differences Drive Yield Variations Across Securities

Strategy has created a tiered preferred stock structure with notable distinctions. STRF stands as the senior-most preferred security with enhanced protective provisions.

The instrument includes dividend step-up penalties and MSTR board seat provisions. STRD shares the same 10% fixed dividend rate but ranks junior to STRF. The subordination results in fewer governance protections for STRD holders.

Market pricing reflects these structural differences through yield spreads. STRF consistently trades at 2% to 5% lower effective yield compared to STRD.

This spread serves as a fear index for Strategy’s preferred complex. When the yield difference widens to 5%, investor concern increases relative to narrower 2% spreads.

Crypto analyst Cern Basher highlighted the relationship between Strategy’s equity issuances on X. The common equity and preferred stocks work together in the capital structure.

Strategy issued $16.3 billion in common equity during 2025. This represented 6% of all US common equity issuance for the year.

STRC Brings Variable Rates and Enhanced Liquidity

STRC functions as a perpetual non-convertible preferred stock with monthly dividend resets. The initial dividend rate started at 9% upon issuance.

Strategy has increased the rate six times to reach the current 11.25% level. The security represents the largest preferred issuance with $3.37 billion outstanding.

Liquidity distinguishes Strategy’s preferred stocks from typical market offerings. STRC trades approximately $150 million daily, equating to 4.5% of total market value.

Other Strategy preferreds collectively trade between $100 million and $200 million per day. Most preferred stocks in the broader market require invitations to trade.

The variable rate structure creates different risk characteristics versus fixed-rate securities. STRD carries long duration and interest rate sensitivity.

STRC maintains short duration with minimal interest rate exposure. Market data shows STRD trades with a volatility risk premium ranging from 1.5% to 4%.

USD Reserve Reduces Volatility and Tightens Spreads

Strategy established a $1.44 billion USD reserve on December 1, 2025. The company subsequently expanded this reserve to $2.25 billion.

This cash position complements the approximately $50 billion Bitcoin treasury. The reserve creation dramatically reduced STRC volatility in the marketplace.

Recent Bitcoin price declines tested the preferred stock complex. STRC maintained trading levels near its $100 par value throughout the downturn.

The spread between STRC and STRF narrowed following the reserve announcement. Current yield differences range from nearly zero to almost 2% between these securities.

The reserve backing changed investor perception of stress risk across the preferred stack. Tighter spreads emerged as confidence in liquidity support increased.

Strategy continues issuing additional STRC securities despite Bitcoin market volatility. The seasoning process demonstrates how structural features influence relative pricing dynamics.

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