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Berkshire Sells $2.6 Billion in Bond Offering to Refinance Debt

Thursday, 31 Jan 2013 12:46 PM

Warren Buffett’s Berkshire Hathaway Inc. sold $2.6 billion of bonds in four parts to pay down debt due next month.

Berkshire, which its 82-year-old chairman built into a $241 billion company in market value with takeovers and stock picks, issued $300 million of 0.8 percent, three-year debt to yield 37.5 basis points more than similar-maturity Treasurys and $800 million of 1.55 percent, five-year notes to yield 70 basis points more than benchmarks.

The company also sold $500 million of 3 percent, 10-year securities at a spread of 110 basis points and $1 billion of 4.5 percent 30-year debt at 140 basis points, according to data compiled by Bloomberg.

Proceeds from the deal will repay $1.2 billion of floating- rate notes and $1.4 billion of 2.125 percent fixed-rate securities, both due Feb. 11, according to a person with knowledge of the transaction, who asked not to be identified because terms weren’t set.

Berkshire, which has $5.6 billion of debentures maturing this year, last issued new bonds in May, selling $1.6 billion of debt in three parts with a record low five-year coupon. Its 1.6 percent securities due in May 2017, which were increased to $1.35 billion from the initial $750 million, traded at 102.7 cents on the dollar to yield 0.95 percent Jan. 25, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The new debt may be rated Aa2 by Moody’s Investors Service, the person said. Goldman Sachs Group Inc. and Wells Fargo & Co. managed the sale for the Omaha, Nebraska-based company.

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