- Berkshire is returning to Japan’s bond market. The company appointed Mizuho Securities and BofA Securities for a potential benchmark yen-denominated offering, its first since April, Bloomberg reported.
- No size or terms yet. The deal is expected in the near future subject to market conditions; in April Berkshire sold six tranches spanning three to 30 years totaling ¥272.3 billion ($1.7 billion), one of its largest yen deals.
- It would be the second yen sale since Warren Buffett stepped down as CEO. Berkshire typically issues yen bonds twice a year, and its yen borrowing is closely tied to its investments in Japanese stocks.
- Timing is delicate. Japanese companies have slowed domestic issuance after an October wave of supply widened corporate spreads over government debt, and Resona Asset Management’s Takashi Fujiwara said demand will depend on the spread.
What Happened?
Berkshire Hathaway has hired banks for a potential yen bond sale, its first in Japan since April, Bloomberg reported. The company appointed Mizuho Securities and BofA Securities for a benchmark yen offering expected in the near future, subject to market conditions, with no final size or terms given. Berkshire has typically issued yen bonds twice a year. In April it sold six tranches with maturities from three to 30 years totaling ¥272.3 billion ($1.7 billion), among its largest yen deals behind its 2019 debut and an October 2024 sale. The prospective deal would be Berkshire’s second yen offering since Warren Buffett stepped down as CEO.
Why It Matters?
Berkshire’s yen issuance is a closely watched signal of how it funds and potentially expands its Japanese equity positions, and a new deal under post-Buffett leadership suggests continuity in that strategy. Takashi Fujiwara, a lead fixed-income fund manager at Resona Asset Management, said Berkshire is well known in Japan because of its investments in Japanese stocks, but that demand will depend on the spread. The market backdrop has softened, with Japanese corporate issuance thinning after October supply widened the extra yield corporate bonds pay over government debt.
What’s Next?
Watch for the size, maturities and spread Berkshire offers once it launches, and how strong demand is relative to April. Any announcement of new Japanese equity stakes after the deal would reinforce the link between its yen borrowing and its Japan investments.
Affected Tickers and Coins: BRK.B, EWJ
Source: Bloomberg
