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United States: Buffett eyes eurobonds and puts tax cash to work

2015/03/08

Warren Buffett’s Berkshire Hathaway is taking a trip across the Atlantic to take chance of the exceptionally low borrowing costs available to highly rated bond issuers in Europe.

The Sage of Omaha, not known for borrowing in European markets, has hired banks inclunding Deutsche Bank, Goldman Sachs and Bank of America Merrill Lynch for a potential eurobond offering, according to people with knowledge of his thinking. This is part of a trend for US companies to take chance of huge request and high prices for euro-denominated bonds that has gathered steam ahead of the European Central Bank launching its bond-buying monetary stimulus this month.

While his natural impulse for a good transaction takes Mr Buffett to Europe, a less remarked upon feature of his career is a savvy approach to taxes. Berkshire’s total deferred tax for the end of 2014 is additional than five times the level of a decade ago.

It is one of two forms of interest-free leverage used by Berkshire. Mr Buffett as well invests premiums from his insurance businesses in the period before they have to be used to pay claims. The size of that insurance “float” increased by $7bn to $84bn in 2014.

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