S&P May Cut Buffett's Berkshire Hathaway (BRK.a) Rating By As Much As Two Notches

Standard & Poor's Ratings Services said today that it placed its ratings on Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.a) (NYSE: BRK.b) and various affiliates on CreditWatch with negative implications following the company's announcement that it will acquire Burlington Northern Santa Fe Corp. (NYSE: BNI).

Standard & Poor's notes that at $44 billion, including $10 billion in debt, this is Berkshire Hathaway's largest acquisition to date. Standard & Poor's expects that a significant part of the cash portion will come from BRK's core insurance operations, as has historically been the case in other transactions.

"We believe that this transaction will decrease the liquidity and capital adequacy of the insurance operations," said Standard & Poor's credit analyst John Iten. "For the consolidated organization, financial leverage will increase and fixed-charge coverage may decline."

Standard & Poor's currently expect that any ratings change would be by no more than two notches.

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