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Banking, finance, and taxes

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

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By Douglas A. McIntyre Updated Published
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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

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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