Warren Buffett, the chairman and CEO of Berkshire Hathaway, is grabbing headlines once more as the company seeks to attract investors for its upcoming second round of yen-denominated bond sales this year. This initiative comes at a time when the Bank of Japan appears less inclined to raise interest rates anytime soon.
According to sources who spoke with Bloomberg, Berkshire Hathaway is exploring the issuance of seven different types of yen bonds, including a notably long 30-year bond. Initial guidance indicates that these bonds will carry a spread about 95 basis points above mid-term interest rate swap contracts.
Buffett’s fundraising efforts have consistently piqued the interest of stock market investors, particularly since he has tapped into yen-denominated funds from the bond market to invest in shares of publicly traded Japanese companies. His investments in leading Japanese trading firms have played a crucial role in propelling the Nikkei 225 index to new record highs this year.
As the Bank of Japan adopts a more dovish approach, yields on Japanese corporate and government bonds are on the decline. This shift follows the appointment of Japan’s new Prime Minister, Shigeru Ishiba, who has taken the uncommon step of openly guiding monetary policy, stating that “the Japanese economy is not ready for another rate hike.” Such comments have significantly altered market expectations regarding the Bank of Japan’s future actions.
Data from Bloomberg shows that Japanese corporate bond yields have fallen from roughly 1.07% in late July to about 0.92% now. Over the same period, the benchmark 10-year Japanese government bond yield has also seen a decrease, dropping by 17.5 basis points to 0.87%.
