Berkshire Hathaway Issues 900 Billion Yen in Bonds Amid Market Volatility

On April 11, local time, the U.S. Securities and Exchange Commission (SEC) disclosed that Berkshire Hathaway, the company under Warren Buffett, issued a bond totaling 900 billion yen (approximately 4.6 billion yuan).

Amidst escalating global trade tensions and financial market volatility, Berkshire chose to issue bonds. However, this was the smallest bond issuance by Berkshire in the Japanese market to date. Based on past experience, Berkshire's bond issuance in Japan is typically used to increase holdings in Japanese company stocks. Analysts suggest that with the decline in stock prices, the valuations of Japan's five major trading companies have decreased, and Berkshire may continue to increase its holdings in these companies. This bond issuance holds significant implications.

Berkshire's latest bond issuance includes six different maturities ranging from 3 to 30 years. Specifically, it issued 486 billion yen in senior notes maturing in 2028 with an annual interest rate of 1.352%, 195 billion yen in senior notes maturing in 2030 with an annual interest rate of 1.593%, 35 billion yen in senior notes maturing in 2032 with an annual interest rate of 1.797%, 91 billion yen in senior notes maturing in 2035 with an annual interest rate of 2.090%, 60 billion yen in senior notes maturing in 2040 with an annual interest rate of 2.492%, and 33 billion yen in senior notes maturing in 2055 with an annual interest rate of 3.117%.

In terms of cost, the annual interest rates for all bonds issued this time are higher than those issued by Berkshire in October of last year. Notably, the 3-year bond, which accounts for the largest portion, has an annual interest rate of 1.352%, compared to 1.031% for the 3-year bond issued in October 2023. In terms of scale, in 2019, Berkshire issued its first 430 billion yen bond; in 2024, it issued yen-denominated bonds twice, totaling over 540 billion yen. Compared to the 281.8 billion yen bond issued by Berkshire in October 2024, this issuance of 90 billion yen is significantly smaller.

Investors have closely monitored Buffett's financing and investment activities. Since 2019, Berkshire has been active in the Japanese corporate bond market, leveraging its high credit rating to issue low-interest bonds for purchasing Japanese dividend stocks. Simultaneously, its investments in Japanese companies often boost market sentiment.

On March 17, Berkshire's wholly-owned subsidiary, National Indemnity Company, disclosed its latest progress in increasing its holdings in Japan's five major trading companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. After the increase, National Indemnity Company's holdings in these companies are close to 10%.

As of March 10, National Indemnity Company's holdings in Mitsubishi Corporation increased from 8.31% to 9.67%, in Marubeni Corporation from 8.3% to 9.3%, in Mitsui & Co. from 8.09% to 9.82%, in Itochu Corporation from 7.47% to 8.53%, and in Sumitomo Corporation from 8.23% to 9.29%.

In February, Buffett stated in his annual letter to shareholders, "Our holdings in these five companies are long-term. From the beginning, we agreed to keep Berkshire's holdings in each company below 10%. However, as we approach this limit, these five companies agreed to moderately relax the cap. Over time, you may see Berkshire increase its holdings in these five companies."

Additionally, the latest financial report shows that Berkshire's cash reserves have reached 334.2 billion dollars, the highest proportion of cash to assets since 1998. In the fourth quarter of 2024, Berkshire continued to sell stocks. According to the financial report, the increase in Berkshire's cash reserves is mainly due to the reduction of its previous heavy holdings in Apple and Bank of America stocks.