Berkshire Plans to Sell First Yen Bonds Since BOJ Move

Berkshire Plans to Sell First Yen Bonds Since BOJ Move

(Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. is planning to sell yen bonds in the global markets, fueling speculation that the billionaire is weighing more investments in Japan.

Most Read from Bloomberg

The US conglomerate mandated banks for a potential benchmark SEC-registered bond offering, according to a person familiar with the matter. The deal may come in the near future, subject to market conditions.

Berkshire Hathaway would be the first major non-financial overseas debt issuer to kick off a yen deal after the Bank of Japan last month scrapped the world’s last negative interest rate.

Spreads on yen-denominated bonds from both Japanese and overseas issuers have tightened to the lowest since September 2022 amid signs BOJ Governor Kazuo Ueda won’t rush to hike interest rates again. The extra yield investors seek for corporate debt is about 52 basis points, down from 67 a year ago.

“Berkshire’s plan to sell a yen bond is spurring speculation that the company may buy more trading-house shares,” said Atsuko Ishitoya, a strategist at Daiwa Securities Co.

Shares of Mitsubishi Corp. gained as much as 2.8%, Sumitomo Corp. jumped 2.3% and Marubeni Corp. rose 1.9%, while the Topix added 0.9%.

The purchases by the legendary US investor helped to propel gains in the Japanese stock market last year, with analysts trying to scope out what his next targets might be.

“There is hope that undervalued stocks, firms with brand strength as well as financial-related companies may be bought, too. It’s positive for overall Japanese stocks,” Ishitoya said.

The US company last turned to the yen bond markets in November, with a ¥122 billion ($803 million) five-tranche deal. It’s a regular issuer of yen bonds, and often taps the market in April.

“The timing for foreigners to invest in Japanese companies couldn’t be better,” said Shunsuke Oshida, head of credit research at Manulife Investment Management Japan. “With the governance reforms and the Tokyo bourse’s message to the capital markets, it makes sense that more and more companies are becoming investor-friendly and so foreigners would want to raise funds to invest in them.”

Buffett said in his annual letter to investors in late February that Japanese trading companies are following investor-friendly policies, driving speculation that he may increase his stakes in these companies. Berkshire Hathaway has funded most of its current Japanese investment through yen bonds, the letter said.

“Berkshire has issued big amounts in the past, surpassing ¥100 billion, which shows that it’s been successful in attracting a wide range of investors,” said Kazuma Ogino, senior credit analyst at Nomura Securities Co.

–With assistance from Winnie Hsu and Naoto Hosoda.

(Updates with a comment on trading house stocks)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.