118. The Skinny On...MicroStrategy's Insane Convert Financing to Buy Bitcoin & Citi Block Trade Fail
Description
In this episode of The Skinny On, we discuss MicroStrategy's recent issuance of $3nn of convertible debt as part of a plan to raise $42nn to buy Bitcoin, as well as the disastrous block trade Citi underwrote for Goodman Group.
We start by talking about converts in general, diving into the difference between convertible debt, convertible preferred, and mandatory converts, including their pros and cons for investors and issuers.
We then get into the terms of the MicroStrategy convert --- not only discussing why it's so extreme, but also WHY there is likely demand for bonds that have such unfavorable terms for investors.
And then finally we discuss a reported block trade Citi did for Goodman Group. We get into what a block trade is, and why Citi is on track to lose $50mm (possibly more) as a result of not correctly pricing the risk.
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