Is Berkshire Hathaway Going To Throw More Money At Japanese Stocks? Here's What Its Latest Yen-Denominated Bond Sale Signals

According to a Bloomberg News report, the offering comprised four tranches of SEC-registered, senior, unsecured bonds with maturities ranging from three to 15 years.

• Three-year notes accounted for the biggest portion of the sales, priced at a spread of 48 basis points over TONA-based yen mid-swaps.
• The company said earlier this year that it plans to boost its ownership interests in Japanese firms Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.
• The company has previously used yen-denominated bonds to fund share purchases.

Warren Buffett’s Berkshire Hathaway reportedly sold 210.1 billion ($1.4 billion) of yen-denominated bonds on Friday at lower borrowing costs compared with its prior deal. 

According to a Bloomberg News report, the offering comprised four tranches of SEC-registered, senior, unsecured bonds with maturities ranging from three to 15 years.

The report added that the proceeds were lower than the 90 billion yen raised in April, the smallest yen issuance by Berkshire since it began issuing the bonds in 2019.

Lower Spreads Than Previous Offerings

Three-year notes accounted for the biggest portion of the sales, priced at a spread of 48 basis points over TONA-based yen mid-swaps, compared with 70 basis points in the previous offering, according to the report. According to Thomson Reuters, TONA is an interest rate benchmark used as a reference rate for a wide range of financial transactions, including loans, bonds, and yen-denominated derivatives. The U.S. firm also paid about 64 basis points on the five-year bonds, lower than the previous offering.

The lower discounts come after investors became more confident in Japanese markets after the Trump tariff-induced volatility earlier this year, when several Japanese companies canceled or delayed domestic bond sales over concerns about rising borrowing costs.

Will Berkshire Boost Its Holding In Japanese firms?

The company said earlier this year that it plans to boost its ownership interests in Japanese firms Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Buffett said in February the investments are for the “very long term”, and the five companies have agreed to moderately relax the limit that had capped Berkshire's holdings below 10% in the respective stocks. Berkshire began acquiring stakes in the five firms in 2019.

According to a CNBC report, Berkshire informed Mitsui that it had raised its stake in the firm to 10.1%. The announcement came months after the Omaha, Nebraska-based firm informed Mitsubishi that it had lifted its stake in the Japanese firm to above 10%. The company has previously used yen-denominated bonds to fund share purchases.

What Are Stocktwits Users Thinking?

Retail sentiment on Stocktwits about Berkshire was in the ‘neutral’ territory at the time of writing.

Earlier this month, the firm stated that its insurance underwriting earnings more than tripled during the third quarter, as it retained more premiums amid the absence of any major catastrophes.

Berkshire Hathaway shares have gained nearly 13% this year, slightly underperforming the S&P 500 index's 14.6% gain and the Nasdaq 100's 17.9% rise, as Buffett is slated to step down as the conglomerate's CEO by the end of the year.

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