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Fitch rates Berkshire Hathaway Finance senior debt issue A+

Staff writer |
Fitch Ratings has assigned A+ ratings to the $1 billion senior unsecured notes issued by Berkshire Hathaway Finance Corp. and fully guaranteed by Berkshire Hathaway Inc.

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The A+ ratings are equivalent to Fitch's ratings on both BRK's and BHFC's outstanding senior unsecured notes.

Fitch's ratings on BRK are supported by the extremely strong capitalization and market position of its insurance subsidiaries, solid operating performance with good diversification across business lines and excellent financial flexibility and liquidity.

Also considered in the ratings are material equity market risk, insured natural catastrophe exposures, growing exposure to asbestos and environmental risk and various issues associated with the company's acquisition strategy.

BHFC's issuance consists of $400 million floating-rate (LIBOR plus 17 basis points) senior unsecured notes maturing Jan. 13, 2017 and $600 million floating-rate (LIBOR plus 30 basis points) senior unsecured notes maturing Jan. 12, 2018. Proceeds from the issuance will fund $1 billion of maturing notes, and consequently, there will be no change in financial leverage.

BRK's consolidated financial leverage ratio was 24% as of Sept. 30, 2014, excluding after-tax unrealized bond gains from stockholders' equity. Consolidated interest coverage for the first three quarters of 2014 was 8.6X excluding realized investment gains.

BRK's financial leverage ratio at the holding company level (including debt issued by the company's finance company subsidiaries and guaranteed by BRK) was 14% at Sept. 30, 2014. The agency views BRK's ability to fund finance operations at a low cost as an important competitive advantage for the finance operations and also notes that much of the finance company debt is guaranteed by BRK.

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