Race to the Bank of Japan's interest rate hike window? Berkshire (BRK.A.US) hires bank prepare for yen bond issuance, or may land soon.

Berkshire Hathaway (BRK.A.US) has hired banks to arrange its first Japanese yen bond issuance since November last year. This move has sparked speculation about its investment plans in Japan. Mizuho Securities said in an email on Thursday that Berkshire has commissioned Mizuho Securities and Bank of America Securities to prepare for a potential benchmark-sized Japanese yen bond issuance. The issuance is expected to take place soon, but is still subject to market conditions. The planned bond issuance comes as the Bank of Japan is expected to raise interest rates further to curb inflation. The swaps market shows that the market expects a 70% probability of a rate hike by the Bank of Japan on April 28, and it is almost certain that a rate hike will be completed before the policy meeting in July. The surge in energy prices following the Middle East war has intensified inflationary pressures and dragged down bond prices, including Berkshire's debt securities. Data shows that the 15-year yen bond issued by Berkshire in November last year - the longest maturity among its total of 210.1 billion yen (1.3 billion US dollars) multi-tenor bond transactions - has seen its spread widen since issuance. Earlier this year, Greg Abel took over the leadership of Berkshire from his legendary predecessor Warren Buffett. The company's expansion in the second largest economy in Asia has become more ambitious. In March, Tokio Marine announced a strategic partnership with Berkshire, and Berkshire's core reinsurer, National Indemnity, will make a strategic investment of 2.49% in Tokio Marine Holdings. Berkshire's strategy for the Japanese market mainly involves financing through yen-denominated bonds and implementing a "borrow yen to buy Japanese stocks" strategy. By issuing yen-denominated bonds, Berkshire not only avoids exchange rate risks but also benefits from Japan's low-interest financing environment. By the end of 2025, Berkshire had raised approximately 210 billion yen through the issuance of yen-denominated bonds. At that time, this move was seen by the market as Berkshire possibly preparing to increase its stake in the five major Japanese trading companies. Berkshire began a series of investments in Japanese trading companies in 2019, but the specific ownership percentages were not disclosed at the time. In August 2020, Buffett announced the purchase of shares in the five major Japanese trading companies (Mitsubishi Corporation, Marubeni, Mitsui & Co., Itochu Corporation, and Sumitomo Corporation), holding more than 5% of each company's shares initially, with an initial total investment of approximately $6.25 billion, gradually increasing to $13.8 billion. In April 2023, Buffett visited Japan after 11 years, publicly expressing optimism about the Japanese stock market, and subsequently increasing his stake in each company to 7.4%. In March last year, after Buffett published his annual letter to shareholders, Berkshire once again announced an increase in its stake in these trading companies - the latest regulatory filings show that Berkshire's ownership in the five major trading companies has increased to 8.53%-9.82%, approaching the 10% limit.