Fitch Gives Berkshire Hathaway New $1.5B Debt ‘AAA’; Negative Outlook

Fitch Ratings has assigned ‘AAA’ ratings to two new issues of debt from Berkshire Hathaway Finance Corporation (BHFC), a wholly owned subsidiary of Berkshire Hathaway Inc. (Berkshire).

The newly rated debt totals $1.5 billion. BHFC issued $700 million of 4.75% senior notes due May 15, 2012 and $800 million of floating-rate notes due May 16, 2008. The notes are guaranteed by Berkshire. The Rating Outlook is Negative.

Berkshire’s ratings are based primarily on Berkshire’s exceptionally strong capitalization, as well as its diversified sources of earnings, substantial financial flexibility, and the strong operating performance of its primary insurance and non-insurance subsidiaries.

These positives are offset by the very high level of ‘key person risk’ at Berkshire and, to a lesser extent, Berkshire’s increased use of debt to fund finance subsidiaries. While current levels of financial leverage are high relative to Fitch’s ‘AAA’ standard, Fitch believes the current debt level represents the ‘high water mark’ for the near future and expects that debt levels will gradually decline over time as debt retirements exceed future issuances.

The following ratings have a Negative Rating Outlook by Fitch:

Berkshire Hathaway Finance Corporation

— $700 million senior notes 4.75% fixed due May 15, 2012 assigned ‘AAA’.

— $800 million floating-rate notes due May 16, 2008 assigned ‘AAA’.