Buffett Bets On Interest Rates

Famed investor Warren Buffett has made a bet  on interest rates. Recently, Berkshire Hathaway issued 30-year fixed rate bonds to pay for existing bonds that were maturing. And while this is a common practice for many companies, what made this interesting is the the maturing bonds were floating rate coupons. Floating rate bonds benefit the a company when interest rates are falling since the coupon payments will decline, while increasing the coupon payments when interest rates are increasing. While no statement on the reason behind exchanging fixed rate bonds floating rate bonds was made by the company, it could be an indication that Mr. Buffett believes that an increase in interest rates is more likely than a decrease.