UPDATE 1-Buffett's Berkshire Hathaway buys Tiffany bonds

By Jonathan Stempel
NEW YORK, Feb 13 (Reuters) - Warren Buffett's Berkshire
Hathaway Inc has agreed to buy $250 million of
debt from luxury jewelry maker Tiffany & Co , the latest
in a string of high-yielding investments by the billionaire
investor.
New York-based Tiffany said it sold Berkshire $125 million
of eight-year notes and $125 million of 10-year notes, all
yielding 10 percent. It said it will use the proceeds to
refinance debt and for general corporate purposes.
The investment marks at least the seventh time since
September that Berkshire has gotten at least a 10 percent
payout by buying company bonds, preferred stock, or convertible
securities.
Many companies are turning to Berkshire for financing as
the global credit crisis makes it too difficult or costly to
raise money from institutional investors.
Tiffany lowered its earnings forecast last month for the
year ended Jan. 31 after holiday sales dropped 21 percent.
For Omaha, Nebraska-based Berkshire, the investments are a
way to generate plenty of income with less risk than by
investing directly in common stocks, which are lower in
companies' corporate structure.
The average U.S. investment-grade bond yielded 7.37 percent
on Thursday, according to Merrill Lynch data.
Since late September, Berkshire has spent $5 billion on
Goldman Sachs Group Inc preferred stock, $3 billion on
General Electric Co preferred stock, $2.6 billion on
Swiss Re convertible debt and a total of $750 million
on securities from motorcycle maker Harley-Davidson Inc
, packaging company Sealed Air Corp and building
materials maker USG Corp . All of these investments
generate annual payouts of 10 percent to 15 percent.
Buffett tends to favor blue-chip companies with market-
leading positions, easy-to-follow businesses and strong
management. In October, he said he plans to move all his
personal holdings, other than Berkshire shares, into U.S.
stocks from government bonds.
Tiffany shares closed down 39 cents at $20.18 on Friday.
They have fallen 60 percent from their 52-week high set last
May 30. Berkshire's Class A shares closed Friday down $1,042 at
$88,140.
(Editing by Andre Grenon)
Keywords: TIFFANY/BERKSHIRE

((jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters
Messaging: jon.stempel.reuters.com@reuters.net))

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