Warren Buffett’s Berkshire Hathaway to issue yen bonds for the third time
TOKYO – Berkshire Hathaway, an investment group led by Warren Buffett, is preparing to issue yen-denominated bonds, its third fundraiser, Nikkei learned on Monday.
Berkshire raised 430 billion yen ($ 3.9 billion) on its first yen bond issue in 2019 and 195.5 billion yen on its second in 2020.
The latest round is also expected to reach several billion dollars.
The conditions of issue will be decided on Thursday. The funds are expected to be raised through the issuance of 5-year, 10-year, 15-year and 20-year notes, underwritten by BofA Securities, JP Morgan Securities and Mizuho Securities.
Berkshire Hathaway revealed after the second bond issue its investment in Japan’s five major trading houses. The new bond issue sparked talks the U.S. investment firm would increase its stakes in those companies, pushing Marubeni and Mitsui shares up 4% at some point in Monday’s trading.
Buffett often holds stocks for a long time and makes investment decisions based on company values and their cash flow. Its portfolios are believed to be made up of big names, including Coca-Cola and American Express.
However, the pool of these good value stocks has shrunk as investment flows into the United States. Buffett has, as a result, extended its investments to Japanese stocks to increase income generation opportunities, some observers say.
“If you get low-interest, low-interest yen-denominated corporate bonds and then buy low-volatility stocks with high dividend yields, you’ll almost certainly make a profit,” said Fumio Matsumoto, strategist. chief at Okasan Securities, referring to Berkshire Hathaway’s investment strategy in Japan. .
Dividend yields on trading house stocks are around 2% to 4%. The coupon rate on the 40-year Berkshire Hathaway bond, which was the longest of those issued last time, was 2%.
When Berkshire disclosed his investment in traders in August of last year, he said he would hold the shares for a long time. He also said he would consider increasing his 5% stake in each of those trading houses to 9.9%. This could be done using the yen dominated funds that Berkshire Hathaway is raising in this round.