Omaha-based conglomerate Berkshire Hathaway Inc., controlled by billionaire investor Warren Buffett, has sold 164.4 billion yen ($1.2 billion) of bonds on Friday. This move follows Buffett’s recent announcement that he has increased his holdings in Japanese trading houses, which surprised the Japanese market.
Details of the Five-Part Bond Deal
The five-part bond deal includes notes as short as three years, according to an email from Mizuho Securities Co., one of the joint book-runners on the deal. The longest tenor, set to mature in 2053, carries a 2.325% annual interest rate. Berkshire Hathaway is one of the largest overseas issuers of yen debt, attracting investors with stronger credit ratings from Moody’s Investors Service and S&P Global Ratings than the Japanese sovereign.
Bank of Japan’s Monetary Policy Impact on Yen Corporate Bonds
Yen corporate bonds’ credit spreads have risen this year on speculation that the Bank of Japan will tighten monetary policy under new Governor Kazuo Ueda. However, all-in corporate borrowing costs remain among the lowest in the world.
Proceeds from the Offering and Berkshire Hathaway’s Refinancing
The proceeds from the offering will be used for general corporate purposes, including refinancing some debt, according to the issuer’s earlier filing this month. Berkshire Hathaway has a 56.3 billion yen bond maturing on Friday.
Buffett’s Confidence in Japanese Trading Houses
In 2020, Berkshire Hathaway stunned Japanese markets by purchasing shares in local trading companies after pricing one of the largest-ever yen bond deals by an overseas issuer. Shares of major Japanese trading houses soared on Tuesday after Buffett told the Nikkei newspaper that Berkshire had raised its holdings in them to 7.4% from about 5% in 2020. Buffett expressed his pride in the investments during a published transcript of the interview.
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Buffett’s Interest in Other Major Japanese Companies
Although Buffett doesn’t currently have a stake in other major Japanese companies, he mentioned that “there are always a few I’m thinking about,” according to the Nikkei report.
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Warren Buffett’s Berkshire Hathaway has sold $1.2 billion in yen debt shortly after increasing its holdings in Japanese trading houses. This move showcases the renowned investor’s confidence in the Japanese market and hints at the possibility of further investments in major Japanese companies.