Berkshire Plans New Yen Bond Sale in Boost to Trading Houses

(Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. is planning its second yen bond sale this year, fueling gains in trading houses on speculation it’s looking to boost investments in Japan.

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Berkshire hired BofA Securities Inc. and Mizuho Securities Co. for a potential benchmark yen-denominated senior unsecured bond offering in the global market. The company is a regular issuer of yen bonds and last sold such debt in April, in the firm’s largest such deal since it first tapped the market in 2019.

The company’s fund-raising plans are closely watched by equity-market investors as Buffett has purchased stakes in trading firms, which helped propel the Nikkei 225 stock gauge to a record high earlier this year. Veteran investor Buffett said in his annual letter in February that Berkshire has financed most of its investment in Japanese companies through yen bond offerings.

Berkshire had about ¥1.41 trillion ($9.8 billion) of yen bonds outstanding as of Oct. 1, according to data compiled by Bloomberg.

“There’s still more room for Berkshire to increase its stake in trading houses,” said Takehiko Masuzawa, head of equity trading at Phillip Securities Japan. For the Japanese stock market overall, “this is good news for those looking to buy, and it will give them the push they need.”

Shares of Japanese trading houses outperformed in Tokyo, with a measure of the companies on the Topix closing 2.6% higher. That compared with 1.7% for the broader index. Both Itochu Corp. and Mitsui & Co. climbed 3.6%.

The extra yield on Berkshire’s 2027 notes – one of its most-traded yen bonds – was about 60 basis points on Monday, according to data compiled by Bloomberg. The notes were sold at a spread of 51 basis points in April. Average yield premiums on yen bonds in a Bloomberg index tightened to 44.8 basis points from about 58 basis points at the start of the year.

–With assistance from Finbarr Flynn.

(Adds amount of yen bonds outstanding in fourth paragraph, updates chart to show total issuance volume, updates share prices.)

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