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Warren Buffett’s Berkshire Hathaway Joins Global Debt Splurge: Yen denominated bonds
Biggest yen debt sale by foreign issuer in seven months. Company was sitting on $128 billion cash pile at end of 2019. Berkshire Hathaway Inc. priced yen-denominated bonds on Thursday, joining a global surge in debt issuance during the past month by companies facing a worldwide recession.
The multi-tranche debt offering of 195.5 billion yen ($1.8 billion) is the biggest bond offering by a foreign issuer in the Japanese currency since Warren Buffett’s conglomerate tapped the market in September. While spreads on company debt have climbed everywhere amid the pandemic, they remain comparatively low in Japan and within ranges seen in 2019.
With economic activity in many nations being put on hold to contain the virus and save lives, borrowing costs for companies globally have surged as credit risks and rating downgrades pile up. Berkshire Hathaway priced 10-year notes at a spread of 105 basis points, more than double the 50 basis points it paid to sell similar-maturity notes a little over half a year ago.
Buffett, the chairman and chief executive officer of Berkshire Hathaway, said last month the effects of the virus and an oil shock were “a big one-two punch.” While his company made a number of opportunistic investments during the financial crisis, it has avoided large acquisitions in recent years as U.S. stocks hit record highs, leaving the firm with a $128 billion cash pile by the end of 2019.
Borrowers have been breaking debt issuance records in markets around the globe in recent weeks as they build out cash buffers to weather the recession and stockpile cash for potential acquisitions. Almost 50 issuers priced about $117 billion in the U.S. investment-grade bond deals last week, shooting past a record set only the previous week.
The size of Berkshire Hathaway’s yen debt sale this time is less than half its inaugural 430 billion yen offering priced in September, which was as one of the biggest ever by a foreigner issuer in the Japanese currency. The company’s yen bonds are expected to be rated AA by S&P Global Ratings and at a comparable level by Moody’s Investors Service.
https://www.bloomberg.com//news/articles/2020-04-09/berkshire-hathaway-joins-global-debt-splurge-with-yen-bonds
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NBA Wants Players To Cut Salaries In Half To Offset $1.2BN In Lost Revenue
Following the March 11 decision by Commissioner Adam Silver to suspend the NBA season, among the first professional sports leagues to take the drastic action after Utah Jazz players began contracting COVID-19, analysts predicted an immediately felt $1.2 billion loss in NBA revenue.
As Bleacher Report broke it down days ago, this translates to a $600 million hit to the players.
League leadership has been under pressure to compensate for the massive losses, first by the controversial question of obtaining returned pay from players, ahead of player contract expiration (or also roll over to the 2020-21 season). Amid ongoing negotiations with agents, the NBA is reportedly pushing for a 50% player pay cut to offset losses based on suspending all games this season, The Athletic reports.
The NBA Players Association (NBAP) meanwhile has countered with a 25% pay cut plan, to take effect by mid-May.
Like other sectors across the US, the league quickly felt the severe impact of coronavirus devastation:
The Philadelphia 76ers were one of the first organizations to enforce a 20 percent pay cut across the organization, but the team backtracked after criticism from fans, media, and people within the franchise.
On Friday, the Utah Jazz announced layoffs to non-basketball staff due to the coronavirus. Other employees agreed to reduce their compensation just so they could keep their employment with the team.
This after three weeks of games have been canceled thus far, with Commissioner Silver planning to decide on a season restart by the beginning of May, which could witness games played in strict isolation, only televised. Starting two weeks ago it was announced top NBA executives, including Adam Silver, would take a 20% pay cut.
This also as teams began furloughing much of their staff, especially non-basketball personnel, such as logistics and marketing employees.
https://www.zerohedge.com/economics/nba-wants-players-cut-salaries-half-offset-some-12bn-lost-revenue
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