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Warren Buffett's Berkshire Hathaway to issue yen bonds for 3rd time

Move fuels speculation of more investment in Japanese trading houses

Warren Buffett, chairman and CEO of Berkshire Hathaway, is widely regarded as one of the most successful investors in the world.    © AP

TOKYO -- Berkshire Hathaway, an investment group led by Warren Buffett, is preparing to issue yen-denominated bonds, its third such fundraising, Nikkei learned on Monday.

Berkshire raised 430 billion yen ($3.9 billion) from its first yen bond issuance in 2019 and 195.5 billion yen in its second in 2020.

The latest round is also expected to reach several billion dollars.

Terms of the issuance will be decided on Thursday. The funds are expected to be raised through the issuance of 5-year, 10-year, 15-year and 20-year notes, which are being underwritten by BofA Securities, J.P. Morgan Securities and Mizuho Securities.

Berkshire Hathaway disclosed after the second bond issuance its investment in Japan's five major trading houses. The new bond issuance has prompted talk that the U.S. investment company would boost its holdings in these companies, sending shares of Marubeni and Mitsui up 4% at one point in Monday trade.

Buffett often holds stocks for a long time and makes investment decisions based on companies' values to their cashflows. His portfolios are believed to be made of big names, including Coca-Cola and American Express.

However, the pool of such good-value stocks have decreased, as investments flowed into the U.S. Buffett has, as a result, expanded his investments to Japanese stocks to increase revenue-generating opportunities, according to some observers.

"If you procure low interest yen-denominated corporate bonds, and then buy low-volatility stocks with high dividend yields, you will almost certainly generate profits," said Fumio Matsumoto, chief strategist at Okasan Securities, referring to Berkshire Hathaway's investment strategy in Japan.

The dividend yields of trading house stocks are around 2% to 4%. The coupon rate of Berkshire Hathaway's 40-year bond, which was the longest out of those issued last time, was 2%.

When Berkshire revealed its investment into traders in August last year, it said it would hold the shares for a long time. It also said that it would consider raising its holdings of a 5% stake in each of these trading houses to 9.9%. This could be done using the yen-dominated funds Berkshire Hathaway is raising in this round.

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