Four of Strategy's six convertible bonds ($3.2B notional) are still trading above par. Even with MSTR trading around $85 (85% below ATH) bondholders are pricing a high probability of principal repayment. As the stock has fallen, the convertibles are trading more like credit instruments and less like equity call options. The market appears to be pricing that Bitcoin and MSTR eventually recover, or that Strategy can refinance its debt before maturity. In other words, credit investors still view the senior convertibles as money good, even as equity investors have become much more pessimistic. The capital structure is signaling that the company is likely to remain solvent, while the upside for common equity has deteriorated.(James Van Straten)