Berkshire Hathaway CEO Greg Abel said Wednesday that rising bond yields in Japan are not weighing on the major Japanese trading companies in which the conglomerate holds stakes. Abel made the remarks during an appearance on CNBC's "Squawk Box" while visiting Tokyo.
"Not a single one of the trading companies raised it as a fundamental challenge right now," Abel told CNBC. He added that Japan's yields, while at multi-decade highs, remain low relative to bond yields elsewhere in the world. "They're still relatively modest when you think about it," he said.
Japan's 10-year bond yield hit a 30-year high this week, reaching just above 3%. By comparison, the U.S. 10-year Treasury yield crossed 4.8% on Tuesday, a level not seen in nearly three years.
Berkshire has accumulated stakes exceeding 10% in five major Japanese trading houses — Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo — businesses with reach across industries from energy to consumer goods. Abel said that when Berkshire first entered these positions, it pledged to stay below a 10% ownership level in each firm, but that all five companies later agreed to let Berkshire cross that line — a shift that came roughly six years into the investment.
Abel said Berkshire intends to hold the positions for decades and that the company has been building relationships with each of the firms. "It's really, one, a long-term investment that we intend to hold for many decades, and then, secondly, we've been building really strong relationships with each of the companies, and looking at other opportunities here in Japan, and for that matter, abroad," he said. "And those are just exceptional discussions." Abel noted that the positions have been financially rewarding, pointing to the considerable appreciation in the trading houses' share prices since Berkshire entered the trade.
Abel said that even with yields at these levels, Berkshire plans to continue tapping the yen bond market when the situation calls for it.
Abel's Tokyo visit comes as Berkshire has been active across its portfolio. Abel described Berkshire's reasoning behind its Alphabet investment during the same CNBC appearance, saying the conglomerate views Google's parent as a significant player in artificial intelligence. Berkshire also addressed growing community opposition to data center construction across the U.S., with Abel noting his company is open to supplying power to large computing firms only if doing so does not raise rates for existing customers.
