Berkshire Hathaway Downgraded by S&P Despite Record High Book Value

Berkshire Hathaway Downgraded by S&P Despite Record High Book Value

Standard & Poor’s has downgraded its long-term counterparty credit rating on Berkshire Hathaway to AA+ from AAA. The action also lowered the financial strength rating on Berkshire’s insurance operations to AA+. The ratings were removed from Standard & Poor’s credit watch and now have a stable outlook. Standard & Poor’s action comes only weeks before Berkshire Hathaway is set to release results for 2009 which will almost certainly indicate thatbook value ended the year at a record high. Read this article for more details.

Berkshire Hathaway to Replace Burlington Northern in S&P 500

Berkshire Hathaway to Replace Burlington Northern in S&P 500

Standard & Poor’s has announced that Berkshire Hathaway will replace Burlington Northern Santa Fe in both the S&P 100 and S&P 500 indices on a date to be announced. The S&P 500 is a broad based index that is perhaps the most widely followed market index in the United States. The S&P 100 is a sub-set of the S&P 500 and is designed to measure the performance of large cap companies across multiple industry groups. Read this article for more details.

Morningstar Enters the Credit Ratings Fray

Morningstar Enters the Credit Ratings Fray

Morningstar has announced the launch of its corporate credit ratings initiative which will initially cover 100 companies with plans for expansion to 1,000 companies as additional credit analysts are hired in the coming months. As we have discussed in recent months, the economic moats of the established credit rating firms such as Moody’s and Standard & Poor’s has continued to shrink in light of multiple high profile ratings failures during the financial crisis. Read this article for more details.

Improved Credit Rating Firms Oversight Cannot Substitute for Investor Vigilance

The well publicized failures of the credit rating agencies in recent years was the subject of intense scrutiny today at the SEC Roundtable on Credit Rating Agencies today in Washington DC. However, none of the reform proposals relieve investors of the fundamental responsibility to investigate the security and safety of their investments rather than relying on third parties as the final word on the matter.

Moody’s Downgrades Berkshire Hathaway

So much for the conspiracy theories! Moody’s, which is 20% owned by Berkshire Hathaway, today downgraded the long term issuer rating of Berkshire two notches fromAaa to Aa2, and the Issuer Financial Strength (IFS) rating of most of the insurance subsidiaries one notch from Aaa to Aa1. After taking this action, Moody’s declared Berkshire Hathaway’s ratings outlook to be “stable”. For those who have signed up for a free account with Moody’s, the text of the action can be found here. Read this post for more details.

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