Saturday, May 18, 2024

Berkshire set to pay more for Yen debt amid BOJ tightening bets

As Warren Buffett visits Tokyo this week, his company looks set to join the ranks of borrowers that are paying more to issue yen debt.

Berkshire Hathaway Inc., one of the largest overseas Japanese-currency bond issuers, kicked off a seven-part note offering this week. Bankers are marketing the deal at a time when yield premiums on yen investment-grade corporate notes have climbed 8 basis points on average since the US conglomerate last priced debt at the start of December.

Also Read: How Warren Buffett rescued US biggest banks from financial crisis

Speculation that the Bank of Japan may tighten monetary policy under new Governor Kazuo Ueda as inflation at home and abroad has remained elevated is spurring investors to seek higher credit premiums on yen bonds. Spreads on foreign company notes also typically move more than on local firms, even for debt of top-rated borrowers such as Berkshire Hathaway.

Buffett has moved Japanese shares this week as well. Stocks of the nation’s largest trading houses including Mitsubishi Corp. and Mitsui & Co. surged Tuesday after he said in an interview with the Nikkei newspaper that he had raised his holdings in the companies to 7.4% from about 5% in 2020 and is looking to increase his exposure to Japanese equities.

Berkshire’s debt deal may price as early as April 14, according to a person familiar with the matter. The proceeds from the offering will be used for general corporate purposes, including refinancing some debt.

The company has sold more than 1 trillion yen ($7.5 billion) of yen notes since its debut issue in 2019. It has a 56.3 billion yen bond that matures on April 14.

This story has been published from a wire agency feed without modifications to the text.

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