Warren Buffett Kicks Off 2011 Bond Sales in $1.5B Offering (BRK-A, BRK-B)

Berkshire Hathaway Inc. (NYSE: BRK-A)(NYSE: BRK-B) was the first of the large corporate bond issues for 2011.  Yesterday brought the pricing of a 3-traunch bond issue from its Berkshire Hathaway Finance Inc. financial subsidiary at spreads tighter than originally expected.

Warren Buffett and friends sold some $1.5 billion senior unsecured noted broken into 3-parts:

• 3-Year floating rate $375 million at LIBOR+33 basis points;
• 3-Year fixed rate $375 million at +58 basis points over Treasuries;
• 10-Year fixed rate $750 million at +95 basis points over Treasuries.

The ratings are as follows: Moody’s/S&P/Fitch as Aa2/AA+/A+ and all with Stable ratings.

The importance is not just that Berkshire Hathaway sold the bonds,  The notion that the bonds were sold at tighter spreads over Treasuries shows that demand is still there for quality fixed income instruments.

The joint book-running managers were listed as Goldman Sachs, J.P. Morgan Securities, and Wells Fargo Securities.

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JON C. OGG