According to informed sources, Berkshire Hathaway (BRK.A.US) has commenced gauging investor interest for a potential multi-tranche yen-denominated bond issuance. This potential offering follows the company's disclosure, just about a week prior, of its plan to invest approximately 300 billion yen (around $1.8 billion) in Tokio Marine Holdings. The sources indicated that Berkshire intends to issue bonds spanning seven maturities, ranging from 3 years to 30 years, with pricing potentially finalized as early as April 10th. This news comes one day after reports emerged that Berkshire had mandated Mizuho Securities and Bank of America Securities to arrange a potential benchmark-sized yen bond issue.
Earlier this year, Greg Abel assumed leadership of the company from his legendary predecessor, Warren Buffett. Under this new leadership, the company has demonstrated increased ambition for expansion within Asia's second-largest economy. In March, Tokio Marine Holdings announced a strategic partnership with Berkshire Hathaway, revealing that National Indemnity, a core reinsurance entity within Berkshire, would make a strategic investment representing a 2.49% stake in Tokio Marine.
Berkshire's strategy for the Japanese market has largely been funded through yen bond issuances, effectively implementing a "borrow yen to buy Japanese stocks" approach. This method allows Berkshire to mitigate foreign exchange risk while capitalizing on Japan's low-interest-rate financing environment. At the end of 2025, Berkshire raised approximately 210 billion yen through the issuance of yen-denominated bonds. That move was widely interpreted by the market as Berkshire potentially preparing "ammunition" to increase its stakes in Japan's major trading houses.
Berkshire initiated a series of investments in Japanese trading companies starting in 2019, though specific shareholding percentages were not disclosed at the time. In August 2020, Warren Buffett announced the acquisition of stakes in Japan's five major trading houses—Mitsubishi Corp, Marubeni, Mitsui & Co, Itochu Corp, and Sumitomo Corp—holding over 5% of each company initially, with a total investment of approximately $6.25 billion, which was later gradually increased to $13.8 billion. In April 2023, Buffett visited Japan for the first time in 11 years, publicly expressing his bullish outlook on Japanese equities and subsequently raising the stakes in each of the five companies to 7.4%. Last March, following the release of Buffett's annual shareholder letter, Berkshire announced further increases in its holdings of these trading houses. Recent regulatory filings show that Berkshire's ownership in the five major trading houses has now grown to between 8.53% and 9.82%, approaching the 10% upper limit.
However, uncertainty surrounding the Middle East conflict has led to volatility in Japanese Government Bond (JGB) yields, prompting investors to demand higher risk premiums. On Friday, the yield spread between 10-year municipal bonds and JGBs widened for the first time in 11 months. In this context, corporate issuers have become more cautious. As of April 3rd, only 12 companies had issued bonds, a decline of nearly 60% compared to the same period last year.
Berkshire's planned bond issuance coincides with expectations that the Bank of Japan (BOJ) will implement further interest rate hikes to curb inflation. Swap market data indicates a roughly 70% probability of a BOJ rate hike on April 28th, with a hike almost certainly expected before the July policy meeting.
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