Buffett’s Berkshire may lose “AAA” S&P rating
Berkshire Hathaway Inc might lose its AAA credit rating if the insurance and investment company capital levels or value of its equity holding face more downward pressure.
S&P late Tuesday revised its rating outlook for Berkshire to negative from stable. It said any downgrade would probably be only one notch to AA-plus.
S&P rival Fitch Ratings on March 12 lowered its equivalend rating on Berkshire to AA-plus from AAA moody’s investors Service rates Berkshire “Aaa” with a stable outlook.
In 2008 profit at Omaha, Nebraska-based Berkshire fell 62 percent and its networth fell 9.6 percent, the worst year since Buffett took over in 1965.
The declines stemmed mainly from paper losses on derivative contracts tied to stock market indexes. Berkshire,s equity holdings such as American Express Co and WElls Fargo & co, have also suffered big declines in value.
” If continued substantial deterioration in the equity markets hurts capital further of if it appears that the insurance group wil not be able to restore capital back to the AAA level through earnings or through capital contributions from Berkshire’s noninsurance operations or external sources, then we might lower the ratins, ” S&P analyst John Iten wrote.
Source: The Economic Times