Buffett's Berkshire Hathaway raises $1.9 billion in largest yen bond sale in five years

Berkshire Hathaway, the investment giant led by Warren Buffett, has raised 281.8 billion yen ($1.9 billion) through a yen-denominated bond issue, signaling its intent to further deepen exposure to Japanese markets.

This move is seen by analysts as part of a broader strategy to increase the company’s investments in Japan.

The bond sale, detailed in a term sheet reviewed by Reuters on Thursday, represents Berkshire’s biggest yen-denominated issuance since 2018.

The company’s latest offering underscores Buffett’s growing interest in Japan’s financial landscape, coming after his firm invested heavily in the country’s top five trading houses over the last four years.

According to a filing with the US Securities and Exchange Commission (SEC), the funds raised through this bond deal will be used for general corporate purposes.

However, the filing did not specify the total size of the bond sale.

Buffett’s Japan strategy

Berkshire Hathaway first announced its interest in Japan’s major trading firms in 2020, stating plans to hold the stakes for the long term.

Since then, the company has steadily increased its ownership in these firms, now holding approximately 9% in each, as confirmed in its February annual report.

Earlier this year, Berkshire sold 263.3 billion yen in bonds, further emphasizing its financial commitment to Japan.

"Berkshire's yen bond sales this year is the biggest in a year since it started selling yen bonds and this indicates their expectations for upside of Japanese stocks,” said Takehiko Masuzawa, trading head of Phillip Securities Japan, as quoted by Reuters.

Impact on Japanese markets

Buffett’s interest in Japan has helped to draw other international investors to the market, boosting confidence in Japanese equities.

The Nikkei index has soared to new highs, increasing by 17.7% so far in 2024, as a result of this surge in foreign investments.

Investors are now keen to see what Berkshire’s next moves will be.

Masuzawa added:

Details of the bond deal

Berkshire Hathaway’s latest bond issuance includes tranches with maturities of 3, 5, 7, 10, 20, 28, and 30 years, as outlined in the term sheet.

The largest tranche, a 3-year bond, raised 155.4 billion yen, while the 5-year bond secured 58 billion yen.

A proposed 15-year bond tranche was dropped from the final deal, with longer-dated bonds added during the transaction, according to messages from the bookrunners.

The final pricing for each of the bond tranches was set at the lower to middle range of the revised guidance given to investors, according to the term sheets.