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Warren Buffet/Berkshire Hathaway refinancing $950 Mil to fixed rate long bonds.
If you are a bond investor, this could be of interest to you. Buffet is a pretty smart dude, and for Berkshire to make a move like this at this point in the bond market is significant.
Act on this information as you see fit;
Warren Buffett is wading into the bond market with a new deal, leaving traders wondering whether the Oracle of Omaha is making a prediction about the direction of interest rates.
Berkshire Hathaway Finance Corp. 1 is issuing 30-year fixed-rate bonds to refinance $950 million of floating-rate senior notes that mature at the end of next week. The decision to switch from floating to fixed could be viewed as a bet on where interest rates are headed. Or, at the very least, it could indicate that the company sees the steep decline in long-term yields over the past two months as a market-timing opportunity that’s too good to pass up.
Berkshire, with the third-highest credit rating from both Moody’s Investors Service and S&P Global Ratings, is expected to price the debt on Thursday with a spread of 150 to 155 basis points above benchmark Treasuries. The 30-year U.S. yield fell to 2.91 percent on Thursday, the lowest since January 2018. The recent bond rally equates to millions of dollars of savings a year for Berkshire, if its plan all along was to convert from floating to fixed rate.
Berkshire Hathaway Finance Corp. 1 is issuing 30-year fixed-rate bonds to refinance $950 million of floating-rate senior notes that mature at the end of next week. The decision to switch from floating to fixed could be viewed as a bet on where interest rates are headed. Or, at the very least, it could indicate that the company sees the steep decline in long-term yields over the past two months as a market-timing opportunity that’s too good to pass up.
Berkshire, with the third-highest credit rating from both Moody’s Investors Service and S&P Global Ratings, is expected to price the debt on Thursday with a spread of 150 to 155 basis points above benchmark Treasuries. The 30-year U.S. yield fell to 2.91 percent on Thursday, the lowest since January 2018. The recent bond rally equates to millions of dollars of savings a year for Berkshire, if its plan all along was to convert from floating to fixed rate.
https://www.bloomberg.com/opinion/articles/2019-01-03/is-warren-buffett-sending-a-signal-about-the-bond-market?srnd=premium
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