Tags: Buffett | Berkshire | Bond | Debt

Buffett’s Berkshire Plans Bond Offering to Retire, Replace Debt

Tuesday, 08 May 2012 01:42 PM

Warren Buffett’s Berkshire Hathaway Inc. plans to issue bonds to redeem $700 million of senior notes due this month and replace $1 billion of debentures that matured in April.

Berkshire, which its 81-year-old billionaire chairman has built into a $204 billion company with takeovers and stock picks, will sell five-, 10- and 30-year bonds, according to a person familiar with the offering who declined to be identified because terms aren’t set. Proceeds from the deal will be used to retire the company’s 4.75 percent notes maturing May 15 and replace 4 percent bonds that came due April 15, Omaha, Nebraska- based Berkshire said today in a regulatory filing.

The owner of railroad operator Burlington Northern Santa Fe and Lubrizol Corp., the world’s largest producer of lubricant additives, plans to offer the debt as a rally in U.S. investment-grade corporate bonds pushes yields to record lows.

Berkshire’s $600 million of 3.4 percent bonds due in January 2022 and sold at 99.72 cents on the dollar in January traded at 103.76 cents on the dollar to yield 2.95 percent at 9:15 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Its $1.1 billion of 1.9 percent notes due in January 2017, which Berkshire also sold in the Jan. 24 offering to help pay for the 2010 acquisition of Burlington Northern, traded at 102.43 cents yesterday with a yield of 1.37 percent.

The new debt may be rated Aa2 by Moody’s Investors Service, two levels below the firm’s top grade, and AA+ by Standard & Poor’s, the person said. Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co. are managing the sale, according to the person.

Yields on investment-grade company debt rose to 3.344 percent yesterday after reaching a record 3.34 percent May 4, according to the Bank of America Merrill Lynch U.S. Corporate Master Index.

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Tuesday, 08 May 2012 01:42 PM
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