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Fitch rates berkshire hathaway finance corporations senior debt issue a+


(The following statement was released by the rating agency) CHICAGO/BOGOTA, May 10 (Fitch) Fitch Ratings has assigned 'A+' ratings to the $1 billion of senior unsecured notes issued by Berkshire Hathaway Finance Corp. (BHFC). The notes are guaranteed by Berkshire Hathaway Inc. (NYSE: BRK). The 'A+' ratings are equivalent to Fitch's ratings on BHFC's outstanding senior unsecured notes that are guaranteed by BRK. The issuance of senior unsecured notes consisted of the following: $500 million, 1.3% coupon, maturing in 2018 and $500 million, 4.3% coupon, maturing in 2043. Proceeds from the senior notes are to be used to redeem notes maturing this month. KEY RATING DRIVERS Fitch's ratings on BRK are supported by 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 risk exposures related to an above average investment allocation to common stocks, a substantial position in equity derivatives, insured natural catastrophe exposures and various issues associated with the company's acquisition strategy and succession planning. BRK's consolidated financial leverage was 24% of total capital as of March 31, 2013. Consolidated interest coverage for the first three months of 2013 was greater than 10x excluding realized investment gains. Both financial leverage and interest coverage ratios are not expected to change meaningfully given the modest size of the issuance relative to total capitalization and since proceeds will be used to pay maturing debt. BRK's debt-to-total capital and debt-to-tangible capital ratios at the holding company level (including debt issued by the company's finance company subsidiaries and guaranteed by BRK) were 17% and 22%, respectively at March 31, 2013. Fitch 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. RATING SENSITIVITIES Key rating triggers that could lead to a future downgrade include: --Deterioration in the credit quality of key insurance subsidiaries (National Indemnity, GenRe, and GEICO) that is no longer consistent with the current 'AA+' rating. Measures of credit quality include Fitch's judgment of capitalization, a total financing and commitments ratio greater than 1.5x, net leverage (excluding affiliated investments) over 3.5x or a sharp and persistent reduction in underwriting profits; --A run-rate debt-to-tangible capital ratio from the holding company, insurance and finance operations (including debt issued or guaranteed by the holding company) that exceeds 30%; --Material increases in leveraged equity market exposure such as its equity index put derivative portfolio; --Acquisitions or other actions that reduce outstanding cash below $10 billion or approximately 5x consolidated interest expense. Key rating triggers that could lead to an upgrade include: --A commitment to lower debt-to-tangible capital ratios attributed to the holding company, insurance and finance operations. Fitch believes that this would likely require the scaling back of the finance operations. Fitch assigned the following ratings: Berkshire Hathaway Finance Corporation (BHFC) --$500 million 1.3% senior notes due May 2018 'A+'; --$500 million 4.3% senior notes due May 2043 'A+'. Fitch took no action on the following ratings: Berkshire Hathaway, Inc. --Issuer Default Rating (IDR) 'AA-'; --$750 million floating rate senior notes due Aug. 2014 'A+'; --$1.7 billion 3.20% senior notes Feb. 2015 'A+'; --$750 million 2.20% senior notes due Aug. 2016 'A+'; --$1.1 billion 1.9% senior notes due Jan. 2017 'A+'; --$500 million 3.75% senior notes due Aug. 2021 'A+'; --$600 million 3.40% senior notes due Jan. 2022 'A+'. Berkshire Hathaway Finance Corporation (BHFC) --IDR 'AA-'; --$1 billion 4.6% notes due May 2013 'A+'; --$1 billion 5% notes due Aug. 2013 'A+'; --$950 million 4.625% notes due Oct. 2013 'A+'; --$375 million floating rate senior notes due Jan. 2014 'A+' --$375 million 1.50% senior notes due Jan. 2014 'A+'; --$400 million 5.1% notes due July 2014 'A+'; --$1 billion 4.85% notes due Jan. 2015 'A+'; --$500 million 2.45% senior notes due Dec. 2015 'A+'; --$1,350 million 1.6% senior notes due May 2017 'A+'; --$1.25 billion 5.4% notes due May 2018 'A+'; --$750 million 4.25% senior notes due Jan. 2021 'A+'; --$775 million 3% senior notes due May 2022 'A+'; --$750 million 5.750% senior notes due Jan. 2040 'A+' --$500 million 4.4% senior notes due May 2042 at 'A+'. GEICO Corporation --IDR 'AA-'; --$150 million 7.4% senior notes due July 15, 2023 'A+'. General Re Corporation --IDR 'AA-'. --$500 million commercial paper program 'F1+'; --Short-term IDR 'F1+'. Fitch did not take a rating action on the following insurance subsidiaries that currently carry an 'AA+' Insurer Financial Strength: --Government Employers Insurance Company; --General Reinsurance Corporation; --General Star Indemnity Company; --General Star National Insurance Company; --Genesis Insurance Company; --National Indemnity Company; --Columbia Insurance Company; --National Fire and Marine Insurance Company; --National Liability and Fire Insurance Company; --National Indemnity Company of the South; --National Indemnity Company of Mid-America; --Wesco Financial Insurance Company. Contact: Primary Analyst Douglas M. Pawlowski, CFA Senior Director +1-312-368-2054 Fitch Ratings, Inc. 70 W. Madison Chicago, IL 60602 Secondary Analyst Christopher A. Grimes, CFA Associate Director +1-312-368-3263 Committee Chairperson Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.this site Additional information is available at 'this site'. Although BRK's General Reinsurance Corp. subsidiary participated directly in the rating process, BRK did not participate other than through the medium of its public disclosure. Applicable Criteria & Related Research: --'Insurance Rating Methodology' (Jan. 11, 2013). Applicable Criteria and Related Research Insurance Rating Methodology — Amended here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW. FITCHRATINGS. COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Ge capital seen ripe for more slimming after credit card ipo


As General Electric Co (GE. N) starts spinning off its consumer credit card business, some on Wall Street are hoping that the U.S. industrial conglomerate will eventually slim down its GE Capital finance unit even further. Commercial real estate, which GE Capital expects to make up 10 percent to 15 percent of its portfolio in the future, stands as another major potential area for GE to abandon, analysts and investors said. GE's finance presence has been under scrutiny ever since the company's share price plunged after the 2008 credit crisis. Thursday's earnings report from GE presents the next chance for analysts to address the company's strategy."From my investor's point of view, the more they look like an industrial company, the better off they are," said Andrew Meister, an equity research analyst at Thrivent Investment Management. Meister and others say that GE's finance presence makes for a more complex company that forces its shares to trade at a discount to manufacturing rivals. GE trades at 15 times forward earnings estimates compared with 16.7 times for United Technologies Corp (UTX. N) and 16.3 times for Honeywell International Inc (HON. N), according to Thomson Reuters data. Financial companies such as CIT Group (CIT. N), Wells Fargo (WFC. N) and Bank of America (BAC. N) trade between 12 to 13.5 times forward earnings estimates.

The future of GE Capital is central to a larger issue facing GE and other conglomerates: What mix of businesses makes the most sense? Barclays analyst Scott Davis raised the topic for GE last month in a research note with the provocative title: "GE: Structurally Broken Story?""The overwhelming evidence, in our view, suggests that GE should not be in the banking business; the appliance business; the lighting business; datacenters, or any other non-core, non-infrastructure based business," Davis wrote of the company, which makes large equipment including jet engines, gas turbines, and MRI machines. To be sure, GE has responded to the concerns by taking steps to reduce its exposure to finance, with the spin-off of its North American retail finance business being the most significant move. The unit -- which bankers and analysts have valued at anywhere from $16 billion to $30 billion -- filed for an IPO last month under the name Synchrony Financial, part of a plan GE laid out in November for separating the business entirely in 2015. It's not clear when this year the spinoff will happen.

Synchrony's divestiture should put GE at least close to Chief Executive Jeff Immelt's goal of cutting the company earnings contribution from GE Capital from about 45 percent last year to 30 percent by 2016. The bulk of the remaining GE Capital business will focus on lending to small and mid-sized firms, which allows GE "to keep their pulse on various industrial end markets," said Brian Langenberg, an analyst with Langenberg & Co. GE also finances sales of products in GE's main industrial areas, such as aviation, healthcare and energy, with about 5 percent of GE Capital that now funds GE's own products.

In commercial real estate, GE Capital does plan to sell off assets in which it holds an equity stake such as buildings. But the company still sees providing financing for commercial real estate properties including refinancings and loans for new buildings as a core part of GE Capital."It's an asset class we know very well, and it's a solid returning business," GE Capital spokesman Russell Wilkerson said, noting the company's 40-year history in such lending. Not everyone agrees with the fit."The one ; var median = (relatedItemsTotal / 2); var $relatedContentGroupOne = $('.related-content.group-one ul'); var $relatedContentGroupTwo = $('.related-content.group-two ul'); $.each($relatedItems, function(k,v) { if (k + 1 = median) { $relatedContentGroupOne.append($relatedItems[k]); } else { $relatedContentGroupTwo.append($relatedItems[k]); } }); } else { $('.third-article-divide').append($('div class="related-content group-one"h3 class="related-content-title"Also In Deals/h3ul/ul/div')); $('.related-content ul').append($relatedItems); } },500); } Next In Deals CBS signs deal to be on Hulu's live-streaming platform CBS Corp has signed a deal to have its broadcast network and some cable programming on Hulu's live streaming service, which is expected to go live this year, the companies said Wednesday. UniCredit investor Cariverona still undecided on cash call: source MILAN The Cariverona foundation has still not made up its mind whether it will underwrite the 13 billion euro ($13.6 billion) rights issue of Italy's UniCredit , a foundation source said on Wednesday. Actelion pulls out of health conference amid M&A activity ZURICH Swiss biotech group Actelion has canceled a scheduled appearance at next week's JP Morgan healthcare conference in San Francisco, it said on Wednesday. MORE FROM REUTERS window._taboola = window._taboola || []; _taboola.push({ mode: 'organic-thumbnails-a', container: 'taboola-recirc', placement: 'Below Article Thumbnails - Organic', target_type: 'mix' }); Sponsored Content @media(max-this site) { #mod-bizdev-dianomi{ height: 320px; } } From Around the Web Promoted by Taboola window._taboola = window._taboola || []; _taboola.push( { mode: 'thumbnails-3X2', container: 'taboola-below-article-thumbnails', placement: 'Below Article Thumbnails', target_type: 'mix' } ); window._taboola = window._taboola || []; _taboola.push