From Capital & Conflict (GBR) – Investors submitted $30 billion worth of bids for just $9 billion of Berkshire bonds on offer this week. They can’t get enough of the stuff! The company will use the proceeds to pay back a $10 billion loan it used as part of a package to buy industrial goods company Precision Castparts last year for $32 billion.
The offering was made up of 2-year, 3-year, 5-year, 7-year and 10-year bonds. But because Berkshire is considered such a good credit risk – and everyone considers Buffett and his partner Charlie Munger geniuses – demand for the Berkshire bonds is off the charts.
And it’s not just Berkshire. Over $264 billion worth of investment-grade corporate debt has been snaffled up in the last 12 months. Much of that came from InBev’s $46 billion bond offering, and from $12 billion offerings by Apple and ExxonMobil respectively. High quality corporate debt is in demand.
It’s probably not just for the yield. Investors are happy to turn their money over to established, cash-generating enterprises than to, say, the government of Greece. But what about Brazil, where government bonds yield investors a juicy 14%?