(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. priced ¥263.3 billion ($1.71 billion) of bonds in the firm’s largest yen debt deal since its debut sale in the currency in 2019, raising bets it may boost holdings of Japanese stocks.

The seven-tranche deal priced at tighter premiums than Berkshire’s deals over the past two years. It was closely watched by equity-market investors amid speculation that Buffett may be preparing for another foray into Japanese stocks. His previous purchase of stakes in trading firms provided an endorsement of the nation’s shares that helped propel the Nikkei 225 to a record high.

“This is good news for Japanese equities, and may be a buying signal for Japan stocks,” said Takehiko Masuzawa, head of equities trading at Phillip Securities Japan Ltd. “This could change the trend of Japanese equities, which have been selling off for profits.” 

Buffett said in his annual letter in February that Berkshire has funded most of its investment in Japanese companies through yen bond offerings. Berkshire has said it hopes to eventually own 9.9% of each of the five major trading houses in which it’s invested. 

Read: Buffett Endorses Japan Trading Firms in Letter, Boosting Shares 

The deal was also a key test of appetite for yen-denominated bonds as concern eases in the credit market that the Bank of Japan will raise interest rates again soon. It was one of the biggest yen bond sales by an overseas issuer since the BOJ scrapped the world’s last negative interest-rate regime last month.

Spreads on yen corporate bonds from both domestic and overseas issuers tightened to around 51 basis points on Wednesday, from around 66 basis points a year ago, according to a Bloomberg index.

The size of the deal “was a big surprise,” said Haruyasu Kato, a fund manager in Tokyo at Asset Management One Co. 

The largest tranche of the deal was a three-year note, with Berkshire raising ¥169 billion from that tenor alone, more than it got in total from its last bond sale in November. As an overseas issuer Berkshire offered a coupon of almost 1% on that tenor, significantly higher than similar-maturity notes sold by Japanese companies, Kato said.

The extra yield was still less than Berkshire’s bond sales over the past two years. For the three-year maturity, for example, the Omaha-based firm offered a spread of 51 basis points over mid swaps, versus 59 basis points in November and 75 basis points in April 2023. 

Buffett’s firm is a regular issuer of yen bonds, and has tapped the market twice a year in 2023 and 2022. Here’s a look at how much Berkshire paid on some maturities over the past two years:


The latest bond sale “will be a tailwind for trading company stocks in which Buffett has invested, and if a report showing large shareholdings in bank or insurance stocks as well, it will be a surprise and likely trigger a ‘Buy Japan’ trend,” Phillip Securities’ Masuzawa said.  

Berkshire’s stakes in trading firms include 8.58% of Mitsubishi Corp., 7.47% of Itochu Corp. and 8.41% of Marubeni Corp., according to the latest information compiled by Bloomberg. Buffett’s equity picks in these companies have outperformed and any renewed backing may give a fresh boost to Japan stocks.

(Updates with quotes from equities trader in third paragraph, bond investor in seventh paragraph.)

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