Fitch Downgrades Berkshire Hathaway on BNSF Deal

Fitch is downgrading its ratings on Warren Buffett's Berkshire Hathaway, ahead of the company's planned acquisition of Burlington Northern Santa Fe.

In a news release on its web site (free registration required), Fitch says it is concerned about the deal's effect on Berkshire's "asset profile, capitalization, and interest coverage" as the company sells $8 billion in notes to help finance its purchase.

Fitch also has "ongoing concerns with the BRK organization's significant equity market exposure."

Fitch's IDR (Issuer Default Rating) for Berkshire goes to AA- from AA+. It also removed the "Rating Watch Negative" it put on Berkshire last November after the BNSF deal was announced. The "Ratings Outlooks" are now "Stable."

Last March, Fitch was the first major credit rating agency to take away Berkshire's top-level AAA rating. Moody's followed in April, and Standard & Poor's took that same step last week.

Burlington Northern shareholders meet tomorrow to vote on the Berkshire merger and, assuming it is approved, the companies plan to close the deal Friday.

Berkshire's Class B shares would then be added to the benchmark S&P 500 stock index after Friday's close.

Volume could spike as index fund managers buy the stock, but it's harder to confidently predict a price spike at the close.

Barron's Andrew Berry says its a big "guessing game" on Wall Street when it comes to Berkshire's stock price, with the "betting now" (Monday) that "Berkshire is apt to rise late Friday, but not dramatically so. There could be an upward move of 3% to 5%, or 2 to 4 points. Again, this is a guess."

The Baby Bs have already soared 9.4 percent to over $74 since the S&P addition was announced after the closing bell on January 26.

Current Berkshire stock prices:

Class A:

Class B:

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