Oct 10 (Askume) – Warren Buffett’s Berkshire Hathaway (BRKa.N) raised 281.8 billion yen ($1.9 billion) by issuing yen-denominated bonds. Analysts said the move paves the way for the U.S. investment firm to increase its exposure to Japanese assets.
A term sheet reviewed by Askume on Thursday showed the deal is the company’s largest yen bond issuance in the past five years.
The issuance of the global yen bond marks Buffett’s growing involvement in Japan’s capital markets, as he has bought stakes in the country’s top five trading companies over the past four years.
Berkshire Hathaway said in a filing to the US Securities and Exchange Commission that proceeds from the deal will be used for general corporate purposes. The size of the deal was not disclosed in the filing.
The company first announced that it was buying stakes in Japanese trading companies in 2020, aiming to retain the companies for the long term and increase its stake to 9.9%. According to its February annual report, the company has increased its stake in Japan’s top five trading companies to about 9%.
Bonds worth 263.3 billion yen were issued in April.
“Berkshire’s sale of yen bonds this year is the biggest since yen bond sales began, reflecting their expectations for a rise in Japanese stocks,” said Takehiko Masuzawa, head of Japan trading at Phillip Securities.
“The market is looking at what types of stocks will be their next targets. Investors believe that value stocks paying high dividends, such as banks and insurance companies, will be the most likely targets.”
Buffett’s bullish stance on Japan has helped attract other foreign investors and pushed the benchmark Nikkei Stock Average (.N225) to a record high this year. The index has gained 17.7% so far in 2024.
In the latest deal, Berkshire issued bonds with maturities of three, five, seven, 10, 20, 28 and 30 years, according to the term sheet.
The three-year financing amount is the largest, reaching 155.4 billion yen. The 5-year bond raised 58 billion yen.
A message sent by the bookrunner of the deal showed that long-term bonds were added during the deal and the proposed 15-year bond was removed.
The term sheet shows that the final price for each tranche was set at the mid-to-lower range of the revised price guidance provided to investors.
(1 USD = 149.1500 yen)
(This story has been corrected in headline and paragraph 3 to say the issue was a global yen bond, not a Samurai bond)
