On April 11, Warren Buffett's Berkshire Hathaway issued a total of 90 billion yen (about 4.6 billion yuan) in bonds. This is the smallest yen trade since Warren Buffett's company entered the Japanese market in 2019. Against the backdrop of market turmoil, the bond offering has received great attention from the market.

Issuance of yen bonds against the trend

Berkshire completed the yen bond deal despite global financial market volatility due to US President Donald Trump's tariffs, which led to the cancellation of bond offerings by a number of Japanese companies. The bonds issued this time are divided into six tranches with maturities ranging from 3 to 30 years. This move is particularly striking against the backdrop of rising funding costs across the board and a scarce supply of long-term bonds.

All of the bonds issued this time have a higher yield premium than Berkshire's issuance in October last year. Three-year bonds accounted for the lion's share, with a yield premium of 70 basis points, up from 49 basis points previously. Shunsuke, Head of Credit Research at Manulife Investment Management Japan Oshida noted that in the current market environment, investors will not necessarily buy even if issuers are willing to offer the highest premium the market allows. While they want to increase their exposure, they prefer to wait for the market to stabilize before making a move.

Berkshire's bond offering has received a lot of attention from the market, as the proceeds could be used to increase its stake in the Japanese company. In March, Berkshire increased its stake in Japan's five largest trading companies — Itochu Corporation, Marubeni, Mitsubishi Corporation, Mitsui & Co. and Sumitomo Corporation — by more than 1 percentage point each, to between 8.5 and 9.8 percent. Back in 2020, Warren Buffett announced on his 90th birthday that Berkshire had acquired more than 5% of each of Japan's five largest trading companies.

At the end of last year, Berkshire's total investment cost to Japan's five largest trading companies was $13.8 billion, with a market value of $23.5 billion. It is worth mentioning that Berkshire buys these Japanese stocks by issuing yen bonds, so they are not affected by exchange rate fluctuations.

For investments in Japan, Buffett said he likes it very much and expects dividend income from these investments to reach about $812 million in 2025, while the interest cost of yen bonds is about $135 million. This means that the net gain is quite substantial.

Optimistic about the Japanese market in the long term

Against the backdrop of turmoil in global financial markets, investors are paying close attention to Buffett's every move, especially his financing and investment movements. Some Japanese analysts pointed out that the strategy of buying Japanese stocks through the issuance of yen bonds (i.e., "borrowing yen to buy Japanese stocks") is seen as a signature method of Buffett's in-depth layout of the Japanese industry. It can be said that the scale of the issuance of yen bonds may become an important indicator to judge the strength of his future position.

In his annual letter to shareholders in February, Buffett made clear his interest in the Japanese stock market, particularly in the Big Five (Itochu Corporation, Marubeni, Mitsubishi Corporation, Mitsui & Co. and Sumitomo Corporation). "We intend to further increase our exposure to Japanese equities – especially these five trading companies. They operate very similarly to Berkshire, and our respect for them has deepened over time. This statement not only strengthened market confidence, but also attracted a large amount of foreign capital into the Japanese stock market.

Thanks to Warren Buffett's support, along with other positive factors, the Nikkei 225 and Topix indices hit record highs at one point. However, by the close of trading on April 11, both benchmarks had retreated by more than 10% in 2025. The main reason for the market pullback is the fear that the escalation of trade frictions could drag on the growth of the global economy.

The stock prices of the five major trading companies fell: opportunity or risk?

Recently, the stock prices of Japan's five major trading companies (Itochu Corporation, Marubeni, Mitsubishi Corporation, Mitsui & Co., and Sumitomo Corporation) have all suffered varying degrees of decline, with many stocks even falling to their lows in August last year. This decline has worried many investors, but others see an opportunity in it.

Some analysts believe that as the stock price fell, the valuation of these five major trading companies also fell. According to Warren Buffett's investment style of "others are afraid of me and I am greedy, and others are greedy and I am afraid", Berkshire's issuance of yen bonds this time is likely to buy the bottom against the trend. In other words, Buffett will most likely continue to increase his stake in these five companies in the future.

Warren Buffett has publicly mentioned his views on Japan's five largest trading companies. He admits that he was shocked by the extremely low stock prices of these companies just by looking through the financial statements of these companies at that time. But over time, he discovered that the five companies were not only cheaply valued, but also operated in a very similar way to Berkshire.

Specifically, these five major trading companies excel in the following areas:

Strong capital allocation: They know how to use their funds wisely, such as increasing dividends or buying back shares at the right time.

Management pragmatism: Executive compensation is far less "aggressive" than its U.S. counterparts and is more focused on long-term shareholder interests.

Investor-friendly: Their management style and corporate culture are very attractive to long-term investors like Warren Buffett.

Record cash reserves: Berkshire held a record $334 billion in cash reserves at the end of 2024. This huge amount of money makes it more comfortable in the face of market volatility.

CEO of Rithottz Wealth Management Josh Brown pointed out that Berkshire is one of the few companies in the market that does not rely on Trump's unpredictable policies. In other words, Berkshire has been able to remain stable with its solid business and strong balance sheet despite how the external environment changes.