Warren Buffett's Berkshire Hathaway hires banks for possible sale of yen bonds

Warren Buffett’s Berkshire Hathaway has hired banks to explore a possible sale of yen-denominated bonds. This proposed sale would bring it back to the yen market for the second time this year.

Suppose the issuance proceeds, Berkshire Hathaway’s yen bond sale would follow its earlier April 2025 issuance of six yen-denominated bonds totalling $627 million. As reported by Cryptopolitan, it was its smallest yen bond deal to date, with maturities ranging from 3 to 30 years.

Buffett’s Japanese trading houses outperform peers

Berkshire has made some of the biggest deals in the yen markets in the past. The company has double A grades and can get more spread than local companies with similar credit scores. In a letter to owners this year, Buffett said that the company started buying shares in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. in 2019.

Hiroshi Namioka, chief strategist at T&D Asset Management Co., said that the possible offering shows that Japanese trading houses are still cheap from a global perspective and are considered undervalued. This is good for the shares.

Hiroshi Namioka said, “Given that Berkshire is currently holding a considerable amount of cash, the fact that it is issuing yen-denominated bonds suggests that it sees investment opportunities in Japan — likely directing funds toward trading companies.”  

Hiroshi Namioka added that while Berkshire agreed to keep its ownership of each company’s shares below 10%, as the company got closer to that limit, the five companies agreed to loosen the ceiling a bit. 

“Over time, you will likely see Berkshire’s ownership of all five increase somewhat,” Buffett wrote this year.

Meanwhile, in the Tokyo stock market, Sumitomo rose 3.8%, while Mitsui and Itochu both increased by about 3%, outperforming the Topix. A stock split and a rise in the yield have helped Itochu’s stock price go up.

The bond mandate is another indication that foreign investors are growing increasingly interested in Japan. Recently, major stock benchmarks have hit many new highs. Berkshire is one of the largest borrowers in the yen bond market, and its stakes in Japan’s largest trading companies make it stand out even more.

Global yields rise and issuers rush to secure funding

This year, global bond sales reached a new high of approximately $6 trillion. This is because borrowers are taking advantage of the low interest rates to fund a wide range of activities, from the rise in AI projects to the rise in acquisitions.

The Omaha, Nebraska-based company has sold nearly ¥2 trillion ($13 billion) in bonds since its start in 2019. This makes it the biggest foreign seller of yen notes during that time.

According to reports, yen loans from foreigners are at their lowest level in four years, at about ¥1.8 trillion. Japanese interest rates are rising, and the Bank of Japan is likely to further tighten monetary policy. This has made Japanese buyers cautious about purchasing corporate bonds this year.

As Haruyasu Kato, a fund manager at Asset Management One Co., put it, “the biggest focal point will be the total issuance amount.” He also said, “it will serve as a litmus test for gauging investor sentiment and available funds across the yen credit market as a whole.”

As a result, market watchers speculate that it may be considering additional investments in Japan. This week, there were more bond sales in the local yen market from companies outside of Japan. For example, Renault SA and Slovenia are about to price deals.

The investor’s stakes in Japan’s five biggest trading companies were first made public in August 2020. Since then, the shares of those companies have more than tripled in value. 

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