Glossary · R
Rate adjustment mechanism
The rules in a variable-rate preferred's terms that govern how and when the issuer may change the dividend rate, including limits on how far and how fast it may be cut.
Revised 22 October 2026 · Suggest a correction
A variable-rate preferred lets the issuer reset the dividend rate, but not freely. The rate adjustment mechanism is the part of the certificate of designations that sets the limits. It usually covers notice periods, a maximum cut per period, a floor and conditions that must be met before any cut. Increases are generally unrestricted.
How it applies to STRC
Under the STRC terms (8-K, 29 July 2025), Strategy may set the monthly rate at its discretion, but it may not cut it:
- by more than 25bp plus any fall in one-month term SOFR over the prior period
- to below one-month term SOFR on the business day before notice is given
- at all while any accumulated dividends remain unpaid
Strategy announces the rate by 8-K and at strategy.com/strc. Since June 2026 it has said it evaluates the rate monthly, taking into account STRC trading levels, market yields, credit spreads, bitcoin volatility and USD Reserve coverage (10-Q, filed 3 August 2026).
How it applies to SATA
SATA's rules are similar but stricter (424B5, 7 November 2025). Strive may cut the rate only if:
- the cut is no more than 25bp plus the fall in monthly SOFR
- the new rate is not below monthly SOFR
- all accumulated dividends are paid
- the prior period's average price was at least $99 (and, during the first three months, a 20-day average above $100)
Why it matters
The mechanism limits how quickly income can fall. The floor ties the minimum rate to short-term US interest rates instead of a fixed number. The extra conditions in SATA's terms mean a rate cut can only follow a period of trading near par.
What to check in the filing
- Notice period for rate changes
- Maximum cut per period and the reference rate used
- Conditions that block cuts