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Warren Buffett’s Berkshire Hathaway Inc. started marketing a multi-tranche of yen bonds on Monday, several months after announcing investments in major Japanese trading companies
Berkshire Hathaway is offering yen banknotes for the third year in a row, aiming at a four-part yen deal that could be valid on Thursday, according to an email from JPMorgan Chase & Co., one of the brokers of the deal. The proceeds will be used for general corporate purposes. The conglomerate sold 430 billion yen ($ 3.89 billion) of securities in its inaugural deal in 2019, which was one of the largest sales ever made by a foreign issuer in yen.
The American company said in August that it acquired about 5% stakes in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. Buffett, President and CEO of Berkshire Hathaway, do not do any major investment in 2020, but the company bought its own shares and is sitting on $ 138 billion in cash.
The company said last year that it planned to maintain its investments in Japanese trading houses in the long run and that it could increase its share in any of the five to up to 9.9%.
Berkshire Hathaway also plans to refinance $ 1 billion in notes due March 15 from the proposed yen debt offering, according to the terms of the deal.
Debt Demand
Demand for corporate bonds in the yen market has been solid this year, as the Bank of Japan’s negative interest rate policy has prevented companies’ debt yields from rising sharply despite volatility. The five-year title of Nagoya Railroad Co., with a coupon of 0.09% last month, attracted demand almost nine times the size of the issue.
Berkshire Hathaway is offering a five-year bond at 17-20 basis points over mid-swaps, which at current market levels is equivalent to a coupon of around 0.2%. The transaction also includes 10-year, 15-year and 20-year notes, with ratings expected from Moody’s Investors Service and S&P Global Ratings higher than those attributed to the Japanese sovereign.
Berkshire Hathaway has yen bonds maturing in 2023 and 2060. Although the 2023 note has returned around 0.01% this year, the longer-term notes have declined as their yields have increased further. The price of the 2060 note fell to 92.55 yen on Friday, from 97.3 yen at the end of last year, according to data compiled by Bloomberg.
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