On Friday local time, Warren Buffett's Berkshire Hathaway issued yen bonds worth 122 billion yen, marking the company's second issuance of yen bonds this year.
This has also sparked increasing speculation from the outside world that Buffett may invest more funds in the Japanese stock market.
Buffett issued Japanese yen bonds for the second time within the year
According to reports, Berkshire has issued five types of bonds with a total value of 122 billion yen (approximately $810 million), with maturities ranging from 3 to 35 years. Compared to previous issues, the interest rate spread has been reduced.
Currently, Berkshire is one of the largest overseas issuers of Japanese yen bonds: out of Berkshire's past 40 bond transactions, 32 were denominated in Japanese yen.
It is worth mentioning that this is Buffett's second issuance of Japanese yen bonds within the year. In April of this year, Berkshire Hathaway issued five yen denominated bonds totaling 164.4 billion yen (approximately $1.1 billion).
Lock in low interest rates before switching from Bank of Japan to Eagle
Berkshire's current issuance of Japanese yen bonds is likely to be aimed at locking in current lower interest rates and financing at lower costs.
In October of this year, the Bank of Japan adjusted its policy on controlling the yield curve of Japanese bonds (YCC), relaxing restrictions on long-term Japanese bond yields. The minutes of the Bank of Japan's interest rate meeting in October showed that several officials of the Bank of Japan began to shift their monetary policy stance towards hawks and conveyed signals of considering exiting negative interest rates.
Bank of Japan Governor Kazuo Noda recently hinted that Japan is moving towards a stable inflation target of 2%, which is a prerequisite for policy normalization. This statement has also raised concerns about the possibility of early policy changes.
If Japan truly abandons the last remaining negative interest rate system in the world, companies such as Berkshire Hathaway may face higher financing costs. And this may also be one of the reasons why Buffett is rushing to issue Japanese yen bonds at the moment.
Buffett may consider increasing investment in Japanese stocks
According to external analysis, Buffett is likely to increase his bets on Japanese stocks after this round of issuance of Japanese yen bonds.
After Berkshire issued Japanese yen bonds in April this year, Buffett visited Japan that month and met with executives from some trading companies. In the following June, Buffett announced an increase in his holdings in companies such as Mitsubishi Corporation and Itochu Corporation, which boosted confidence in the overall Japanese stock market and pushed it to a 33 year high.
Currently, Berkshire has become one of the most eye-catching overseas investors in the Japanese stock market.
An analyst at Daiwa Securities in Japan wrote earlier this month that Buffett may take Japanese banks, insurance companies and automobile manufacturers as his next investment target.