We know that the market takes notice when Warren Buffett makes a move and the market certainly noticed his latest foray into the bond market.
Berkshire Hathaway announced it would be issuing USD$10 billion worth of bonds and investors quickly lined up to take part. The bonds are to be issued in several tranches and will be used to re-finance bank debt taken on as part of the USD$36billion Precision Castparts acquisition in 2015. One tranche of 5 year FRNs has been pulled from the offering and the total value of bonds on offer pared back to USD$9 billion but the remaining tranches include fixed and floating rate paper over 2 years and 3 years and 5 year, 7 year and 10 year fixed rate paper. The order book for the deal is said to have reached a staggering USD$34 billion. Price guidance on the deal was unavailable but the company had previously issued 10 year paper at US Treasurys + 130bps.