(Nov 6): Berkshire Hathaway Inc hired banks for a potential yen-denominated bond sale, as borrowers around the world drove issuance so far this year to a new record.
Warren Buffett’s company would be tapping the yen market for the second time this year if it proceeds with the offering. The local yen debt market has seen a pickup in bond deals this week by overseas issuers with Renault SA and Slovenia getting ready to price deals.
Berkshire Hathaway is one of the biggest borrowers in yen bond markets, and attracts increased attention given the company’s stakes in a bunch of Japan’s largest trading companies and speculation about how it uses the yen funds.
“Given that Berkshire is currently holding a considerable amount of cash, the fact that it is issuing yen-denominated bonds suggests that it sees investment opportunities in Japan — likely directing funds towards trading companies,” said Hiroshi Namioka, the chief strategist of T&D Asset Management Co.
Berkshire’s issuance is a sign that “Japanese trading houses are still cheap from a global perspective and are considered undervalued, which makes this move positive” for the shares.
Global bond sales have soared to a record this year of about US$6 trillion as borrowers take advantage of easy market conditions to fund everything from the boom in artificial intelligence projects to a revival in acquisitions.
See also: China smashes bond sale records with over US$234b of bids
Berkshire Hathaway’s double A ratings and the potential to pick-up extra spread than on local corporates of comparable credit scores have made the firm’s deals some of the biggest in yen markets in the past.
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