Fitch Joins Berkshire & Buffett Downgrade Brigade (BRK-B, BRK-A, BNI)

Berkshire Hathaway Inc. (NYSE: BRK-B) (NYSE: BRK-A) has already seen its ratings cut last week by Standard & Poor’s over the added leverage of the Burlington Northern Santa Fe (NYSE: BNI) acquisition.  Now we have Fitch Ratings joining in on the wave of downgrades.  The difference here is that Berkshire Hathaway had already been under the Triple-A status, which effectively means that this is a second lowering of the bar.

Fitch lowered Berkshire Hathaway’s ratings by two notches to AA- from AA+ as the BNSF buyout changes the company’s asset profile, its capitalization and its interest coverage.  The cuts were made to Berkshire Hathaway and its insurance units to AA- from AA+ on added market exposure.  The ratings on the senior unsecured notes were cut to A+ from AA and the financial strength ratings of insurance subsidiaries were cut to AA+ from AAA.

This is the end of the Fitch cycle as the ratings have now been removed from a downgrade watch after being placed there in November.  The rating outlook is now listed as ‘stable.’

Today’s move was no surprise.  After all, there are probably no Triple-A ratings for ANY entity any longer if all of the recent worries are brought back to light…

JON C. OGG
FEBRUARY 10, 2010