Fitch gives A+ to Berkshire Hathaway notes

Fitch Ratings said it assigned A+ ratings to four new senior notes issued by Berkshire Hathaway Inc. and its wholly owned finance subsidiary Berkshire Hathaway Finance Corp. totaling $2.5 billion.

The offerings include €1.1 billion of senior unsecured notes issued by Berkshire Hathaway and $1.3 billion of senior notes issued by Berkshire Hathaway Finance, which are fully and unconditionally guaranteed by the parent.

Proceeds from the Berkshire Hathaway issue will be used to refinance $1.1 billion of 1.9% senior notes maturing in January 2017. Proceeds from the Berkshire Hathaway Finance notes will be used to refinance $1.05 billion of floating-rate senior notes that also mature in January 2017.

Fitch said Berkshire Hathaway’s consolidated financial leverage ratio was 27% as of Sept. 30, and this ratio is not expected to change, because the issuance is essentially refinancing maturing debt.

Further, this level of financial leverage would not trigger any rating sensitivities; however, Berkshire Hathaway is approaching Fitch's limits on financial leverage and interest coverage. Consequently, a material acquisition funded with significant amounts of debt would place downward pressure on Berkshire Hathaway’s ratings, the agency explained.

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