Berkshire Hathaway Is On ‘CreditWatch Negative’ With Standard & Poor’s

Berkshire Hathaway and Standard And Poors Watch

Standard & Poor’s has given Warren Buffett’s Berkshire Hathaway a “CreditWatch Negative” rating following the company’s $37.2 billion acquisition of Precision Castparts. Along with the acquisition, Mr. Buffett’s company acquired $5 billion in debt.

S&P says the move “reflects uncertainty around the funding of the acquisition and how it may affect current cash resources and leverage metrics at the holding-company level. In addition, we believe that to fund the acquisition, BRK is likely to use some of the capital resources available at its insurance companies.”

S&P adds that it “will monitor developments related to this transaction and expect to update or resolve the CreditWatch listing within the next 90 days, following discussions with [Berkshire’s] management on prospective holding company cash and leverage metrics, capital adequacy at the insurance companies, and consolidated earnings and cash-flow metrics.”

Berkshire Hathaway paid $235 per share for the company.

The S&P is watching Berkshire after it reported earnings that missed expectations because of underwriting losses in its insurance unit during the second quarter.

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Written by Peter Mondrose

Peter Mondrose

Peter Mondrose is the Editor-In-Chief at BusinessPundit. He received his degree in Economics in 1998 and a second degree in Journalism in 2004. He has served as a financial adviser, market trader, and freelance journalist for the last 11 years. When he's not investigating market conditions and reporting on workplace news, he can be found traveling with his wife, dog, and laptop. He can be reached at PeterMondrose@BusinessPundit.com or (929) 265-0240.