Warren Buffett<\/a>\u2019s Berkshire Hathaway Inc. had its credit grade cut two levels by Fitch Ratings after the company agreed to buy railroad Burlington Northern Santa Fe Corp. <\/p>\n\u201cThe downgrades reflect Fitch\u2019s concerns about the Burlington Northern acquisition\u2019s effect on Berkshire\u2019s asset profile, capitalization, and interest coverage,\u201d the ratings company said in a statement today. The firm was also cut because of its \u201csignificant equity market exposure.\u201d <\/p>\n
Fitch was the first of the three largest credit-rating companies to strip Berkshire of its gold-standard AAA rating last March, citing the effect of falling stock markets on the Omaha, Nebraska-based company\u2019s derivative bets. Moody\u2019s Investors Service followed a month later, and Standard & Poor\u2019s removed its top rating last week. <\/p>\n
Berkshire is taking on debt, drawing down cash and issuing shares to fund the $26 billion takeover of Burlington Northern. Buffett, 79, has called the railroad takeover an \u201call-in wager\u201d on the U.S. economy. <\/p>\n
\u201cBerkshire\u2019s financing of the Burlington Northern acquisition is expected to result in a meaningful increase in financial leverage,\u201d Fitch said in the statement. <\/p>\n
Fitch cut Berkshire\u2019s issuer default rating to AA- from AA+ and lowered the insurer financial strength rating to AA+ from AAA. It changed its rating outlook to \u201cstable\u201d from a \u201cnegative\u201d ratings watch. <\/p>\n
Berkshire Class A shares fell $35 to $111,665 at 12:58 p.m. in New York Stock Exchange composite trading. Buffett\u2019s company has climbed 27 percent in the past year. <\/p>\n