Berkshire Hathaway raises $1.9 billion in global yen bonds, set to boost Japan bets

Warren Buffett's Berkshire Hathaway has raised 281.8 billion yen ($1.9 billion) in a yen-denominated bond offer, a move analysts say lays the ground for the US investment company to increase its exposure to Japanese assets.

The deal was the largest bond sale in the Japanese currency for the firm in five years, a term sheet reviewed by Reuters on Thursday showed.

The global yen bond issue signals Buffett's deepening association with Japan's capital markets after its equity stake buys in the nation's top five trading houses over the past four years.

Berkshire Hathaway said in a US Securities and Exchange Commission filing that the proceeds raised in the deal would be used for general corporate purposes. It did not disclose the size of the deal in the filing.

The firm first announced it would buy stakes in Japan's trading houses in 2020 with the intention of holding them long-term and increasing ownership to as much as 9.9%. Since then, it has raised its stake in Japan's top five trading firms to around 9% each, according to its annual report in February.

It sold 263.3 billion yen of bonds in April.

"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.

"The market is looking at what kind of stocks will be their next target. Investors see value stocks which pay higher dividends, such as banks and insurers, will be the most likely targets."

Buffett's optimism on Japan has helped attract other foreign investors and send the benchmark Nikkei index to a record high this year. The index has risen 17.7% so far in 2024.

In the latest deal, Berkshire Hathaway issued bonds with tenors of 3, 5, 7, 10, 20, 28 and 30 years, according to the term sheet.

The 3-year tranche was the largest with 155.4 billion yen raised. The 5-year bond raised 58 billion yen.

Longer-dated bonds were added during the transaction and a proposed 15-year tranche was dropped, messages sent from the deal's bookrunners showed.

Final prices for each of the tranches were set at the lower to middle end of the revised price guidance given to investors, term sheets showed.