Warren Buffett's Latest Bond Deal

Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) has agreed to invest $250m at 10% in bonds issued by Tiffany (NYSE:TIF), the luxury jeweller. Buffett has sought to capitalized on the downturn to buy stock or debt in companies ranging from General Electric (NYSE:GE) and Harley-Davidson (NYSE:HOG) to Swiss Reinsurance and Goldman Sachs (NYSE:GS) all paying Berkshire 10%.

Tiffany has been hard hit by the fall in US luxury demand, and saw its net sales in November and December fall by 21 per cent, with comparable sales at its US stores down by a third. As a result it expects to announce a fourth quarter loss when it reports results in March. Its efforts to refinance debt were also thrown into disarray when the credit crisis errupted in September. Berkshire bought two tranches of bonds, maturing in 2017 and 2019 respectively

Tiffany’s shares have lost a third of their value since September. In November last year when the credit crisis broke it had been in negotiations to raise $300m to repay $100m of senior notes coming due this year, and to fund potential share repurchases. It subsequently sold $100m in bonds due in 2015 to institutional investors in December, at 9 per cent.

Berkshire has recently bought $750m in combined debt from Harley-Davidson, the motorbike maker, USG (NYSE:USG), which makes construction walling and Sealed Air (NYSE:SEE), the maker of Bubble Wrap.