Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway (BRK.A) has issued 90 billion yen in bonds, approximately 46 billion RMB. This marks the smallest yen transaction by the company since entering the Japanese market in 2019. The bond issuance has drawn significant attention as it might signal Berkshire's intention to increase its stake in Japanese companies, especially the five major trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.
Despite market volatility leading many Japanese firms to cancel bond issuances, Berkshire proceeded with its yen bond offering. The bonds, divided into six parts with maturities ranging from 3 to 30 years, carry a yield premium higher than last October's issuance. The three-year bond, which holds the largest share, has a yield premium of 70 basis points, significantly higher than the previous 49 basis points.
Berkshire's strategy of using yen debt to finance Japanese stock purchases is seen as a deepening commitment to the Japanese market. In recent months, Berkshire increased its holdings in the five major trading houses by over 1%, with shares now ranging between 8.5% and 9.8%.
Berkshire's yen bond strategy is perceived as a counter-cyclical move, potentially signaling further investments in Japan. Buffett has expressed admiration for the Japanese firms' operational similarities to Berkshire, including prudent capital allocation and investor-friendly policies.
