(Bloomberg) — Berkshire Hathaway Inc. has started sounding out investors for its second yen bond deal this year, at a time when expectations for more rate hikes soon in Japan have receded.
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Warren Buffett’s company is considering selling seven tranches including 30-year debt, with early guidance for the spread of those bonds around 95 basis points over mid-swaps, according to people familiar with the matter. The issuer is planning to price the deal as early as Oct. 10, said the people, who asked not to be identified because the matter is private.
The billionaire investor’s fundraising plans are closely watched by equity-market investors because Buffett has used yen funds raised in the bond market to purchase stakes in Japanese companies. His buying of stocks in Japan’s biggest trading firms helped drive up the Nikkei 225 share gauge to a record high earlier this year.
A yen bond deal by Berkshire would come as Japanese corporate bond yields slide along with those of government notes on the shifting Bank of Japan policy outlook. Expectations have changed after newly selected Prime Minister Shigeru Ishiba took the unusual step of delivering what appeared to be a policy suggestion to the central bank, by saying Japan’s economy wasn’t ready for more rate hikes yet.
Yields on Japanese corporate bonds have fallen to about 0.92% from as high as around 1.07% at the end of July, according to Bloomberg-compiled data. Benchmark 10-year JGB yields dropped 17.5 basis points to 0.87% in that period.
The initial guidance for Berkshire’s yen bond spreads is wider on all tranches expect the three-year, after the BOJ surprised many in the market with a second rate increase of the year in July. It’s sounding out demand for 10-year bonds at about an 80 basis-point spread, for example, compared with around 70 basis points for similar-maturity notes sold in April.
(Adds likely pricing date in the second paragraph, and a chart.)
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