Greg Abel, chief executive of Berkshire Hathaway, said on Tuesday that rising Japanese bond yields do not present a challenge for the country’s trading houses, describing borrowing costs there as still relatively modest by historical standards.
Speaking on CNBC’s “Squawk Box,” Abel addressed growing questions about how higher rates in Japan might affect Berkshire’s investments in the five large trading companies it has built stakes in since 2020. His message was that yields, though climbing, remain low enough to keep those businesses comfortable.
“Borrowing costs in Japan are still relatively modest,” Abel said, adding that the yield environment does not pose an immediate concern for the trading houses at current levels.
The comments arrive as Japanese government bond yields have drifted upward following years of ultra-loose monetary policy. The Bank of Japan has gradually moved away from negative rates, and longer-dated yields have reached levels not seen in more than a decade, prompting investors to reassess borrowing conditions across corporate Japan.
Berkshire holds positions in Mitsubishi, Mitsui, Itochu, Marubeni and Sumitomo, the trading conglomerates known in Japan as the sogo shosha. These firms operate across energy, metals, food and industrial supply chains, and their diversified cash flows have made them a durable holding for the American investment company.
Warren Buffett has repeatedly praised the trading houses for their disciplined management and steady dividends, and Berkshire has signaled it intends to hold the stakes for the long term. Abel, who is set to succeed Buffett as chief executive, has taken a more visible role in explaining the company’s positions to investors.
Behind the numbers, the durability of these holdings depends partly on how cheaply the trading houses can finance their sprawling operations. For a company carrying substantial debt across global commodity businesses, even a gradual rise in rates can compress margins over time, which is why the direction of Japanese yields draws close attention.
The broader shift in Japanese monetary policy has drawn scrutiny from officials abroad as well, with some pressing Tokyo to lift rates further and strengthen the yen. Earlier this year, the central bank warned financial institutions to prepare for rising market risks tied to that transition.
For investors watching Berkshire, Abel’s reassurance suggests the company sees no reason to trim its Japanese bets over financing pressures, at least for now. The trading houses continue to generate the steady returns that first drew Buffett’s interest, and current yields leave that thesis intact.