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By Warren Buffett Berkshire Hathaway Inc. started a multi-bond deal in yen tranches on Monday, several months after announcing investments in Japan’s largest trading companies.
Berkshire Hathaway offers yen tickets for the third year in a row, aimed at a four-party deal in yen that could be priced Thursday, according to an email from JPMorgan Chase & Co., one of the dealers ’book brokers. The proceeds will be used for general corporate purposes. The conglomerate sold 430 billion yen ($ 3.99 billion) of its value inaugural deal in 2019, which was one of the largest sales ever made by a foreign issuer in the yen.
The US firm said in August that it had acquired a 5% stake in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. Buffett, president and CEO of Berkshire Hathaway, didn’t make anyone do it a major investment in 2020, but the company bought its own stock and is sitting $ 138 billion in cash.
The company said last year that it planned to do so keep your Japanese investments in long-term trading and you could increase their stake in any of the five to 9.9%.
Berkshire Hathaway also plans to refinance $ 1 billion in notes maturing on March 15 from the proposed yen debt offer, according to the terms of the deal.
Debt demand
Demand for corporate bonds in the yen market has been strong this year, as the Bank of Japan’s negative interest rate policy has kept corporate debt yields rising sharply, despite volatility. Nagoya Railroad Co.’s five-year bond, which had a 0.09% coupon last month, almost met demand nine times the size of the issue.
Berkshire Hathaway offers a five-year bond at 17-20 basis points above average swaps, which at current market levels equates to a 0.2% coupon. The deal also includes 10-, 15- and 20-year notes, with ratings expected from Moody’s Investors Service and S&P Global Ratings higher than those given to Japanese sovereign debt.
Sales of yen debt by foreign issuers tend to pay Japanese investors a larger distribution than local issuers of comparable credit quality due to perceived additional risks. However, yen bond sales by non-Japanese borrowers are facing a record low of about 264 billion yen, as central bank stimulus in other regions has made the yen market less attractive. .
Berkshire Hathaway has yen bonds maturing from 2023 to 2060. While the 2023 note has returned around 0.01% this year, notes with a longer date have shrunk as their yields have increased further. According to data collected by Bloomberg, the price of the 2060 ticket fell on Friday to 92.55 yen on Friday, from 97.3 yen at the end of last year.
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