S&P rates Burlington Northern notes BBB+

Standard & Poor’s said it assigned a BBB+ rating to Burlington Northern Santa Fe LLC’s debentures.

The proceeds will be used from these debentures for general corporate purposes, which may include working capital, capital expenditures, repayment of outstanding debt and distributions, S&P said.

The ratings reflect the U.S. freight railroad industry’s positive risk characteristics and the company’s large and strategically important rail network and broad diversity of the commodities it transports, the agency said.

Price competition from other railroads and trucking companies in certain commodities and the company’s capital-intensive operations, significant debt burden and large distributions to its higher rated parent, Berkshire Hathaway Inc., offsets these strengths, S&P said.

The ratings on Berkshire Hathaway were placed on CreditWatch with negative implications Aug. 11, the agency said. The potential extent of any downgrade would not be sufficient to cause changes to the ratings on Burlington Northern Santa Fe or its subsidiaries.

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