The second-biggest European insurance provider, Allianz SE, has purchased over a quarter of MicroStrategy’s convertible notes that are due in 2031.
The acquisition, made on November 22nd, 2024, comes as Bitcoin prices have been hitting new all-time highs, also signifying the trust and acceptance of mainstream financial institutions towards digital assets.
When a business issues debt securities, or notes, to raise money, this is known as note issuance. This is usually done by a firm to raise capital to use in general proceeds of the firm or to use the money for specific purchases.
Allianz’s Notes Buy Comes As MicroStrategy Takes Another Notes Issuance
Allianz’s decision to buy MicroStrategy’s convertible notes comes at a time when the firm has been issuing notes aggressively to raise capital.
Just yesterday, MicroStrategy declared that it has finished issuing its 0% convertible senior notes due in 2029. The notes sold in the offering had a total principal amount of $3 billion, which included $400 million in notes issued as part of an option to purchase granted to the initial purchasers.
After subtracting commissions and discounts paid to the original buyers, as well as the expected offering costs that MicroStrategy would have to pay, the notes’ net proceeds came to about $2.97 billion.
MicroStrategy’s Notes Issue In Tandem With Market
At present, MicroStrategy is not the only firm that has embarked on the note issuance tactic. Previously, the largest Bitcoin mining firm in the world, Marathon Digital Holdings, had announced a $250 million sale of convertible senior notes that are due in 2031.
Depending on market conditions, the company was also thinking about offering an extra $37.5 million worth of notes to original buyers.
Crypto Firms Take On Note Issuance To Buy More Bitcoins
With multiple crypto firms take up note issuance, one major question that almost all in the industry have asked is, how will these firms use the money?
The most common reason for any crypto firm to issue notes is the purchase of Bitcoin.
Marathon Digital had mentioned that buying more Bitcoin was the main goal of the offering’s proceeds.
Additionally, even MicroStrategy, the world’s leading Bitcoin-focused business analytics organization, had expanded its Bitcoin treasury. On November 18th, the company made one of its largest purchases of $4.6 billion worth of Bitcoin.
The crypto hedge-fund proxy made the biggest purchase since it began purchasing Bitcoin more than four years ago, purchasing 51,780 of the digital currency.
The money for this purchase was also collected via share sale, note issuance, and funding from other sources.