Thursday, February 04, 2010
By Ken Sweet
MarketWatch Pulse
Analysts at S&P said they were reducing Berkshire’s credit rating because of the railroad purchase and because“Berkshire’s overall capital adequacy, as well as that of its insurance operations, has weakened to levels no longer consistent with a ‘AAA’ rating and is not expected to return to extremely strong levels in the near term.”
S&P also returned Berkshire Hathaway’s, which is run by notable billionaire Warren Buffett, future outlook to “stable,” a signal that another downgrade of Berkshire’s credit rating was unlikely in the next six months.
S&P had placed Berkshire on “CreditWatch negative” early November after the company announced it would purchase Burlington Northern in a transaction that Buffett called “an all-out bet” on the American economy.
S&P was the last of the three major U.S. ratings agencies to have the company at AAA. Moody’s Investors Service and Fitch Ratings took that gold standard away last year amid the financial crisis. There are now just five publicly traded companied that carry a AAA rating from S&P: Automatic Data Processing (ADP: 40.69, -0.11, -0.27%), ExxonMobil (XOM: 65.12, -1.47, -2.21%), Johnson & Johnson (JNJ: 63.09, -0.53, -0.83%), Microsoft (MSFT: 28.11, -0.52, -1.82%) and Pfizer (PFE: 18.22, -0.39, -2.1%).
Shares of Berkshire’s B-shares, the most liquid class of stock for the company, were down 2.8% to $72.30 on Thursday.
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