Authors: Scott Murdoch and Junko Fujita
(Reuters) – Warren Buffett’s Berkshire Hathaway (NYSE:) raised 281.8 billion yen ($1.9 billion) in a yen-denominated bond offering, which analysts say provides the basis for the U.S. investment company to boost its exposure to Japanese assets .
The deal was the largest Japanese currency bond sale for the company in five years, according to a term sheet reviewed by Reuters on Thursday.
The global yen bond issuance signals Buffett’s deepening ties to Japanese capital markets after he purchased shares in five of the country’s largest chambers of commerce over the past four years.
Berkshire Hathaway said in a filing with the U.S. Securities and Exchange Commission that proceeds from the transaction would be used for general corporate purposes. The application did not specify the size of the transaction.
The company first announced that it would buy shares in Japanese department stores in 2020 with the intention of holding them long-term and increasing its stake in them to as much as 9.9%. It has since increased its stake in Japan’s five largest trading companies to about 9% each, according to its February annual report.
In April, it sold bonds worth 263.3 billion yen.
“This year’s Berkshire bond sales in yen are the highest in a year since Berkshire began selling yen bonds, indicating investors’ expectations for a rise in the value of Japanese stocks,” said Takehiko Masuzawa, chief commercial officer of Phillip Securities Japan.
“The market is looking at what stocks will be their next target. “Investors believe the most likely targets will be value companies that pay higher dividends, such as banks and insurers.”
Buffett’s optimism about Japan has helped attract other foreign investors and pushed the benchmark index to record highs this year. In 2024, the index is up 17.7% so far.
In the latest deal, Berkshire Hathaway issued bonds with maturities of 3, 5, 7, 10, 20, 28 and 30 years, according to the term sheet.
The largest tranche was a 3-year tranche that raised 155.4 billion yen. Thanks to the 5-year bonds, it was possible to raise 58 billion yen.
According to messages sent from the book-runners, bonds with longer maturities were added during the transaction, and the proposed 15-year tranche was rejected.
Final prices for each tranche were set at the low to mid-range of the revised pricing guidance provided to investors, the term sheets showed.
($1 = 149.1500 yen)
(This story has been corrected to show global yen bonds rather than samurai bonds in the headline and paragraph 3)
