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Banking, finance, and taxes

Warren Buffett Kicks Off 2011 Bond Sales in $1.5B Offering (BRK-A, BRK-B)

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By Jon C. Ogg Updated Published

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Berkshire Hathaway Inc. (NYSE: BRK-A)(NYSE: BRK-B) was the first of the large corporate bond issues for 2011.  Yesterday brought the pricing of a 3-traunch bond issue from its Berkshire Hathaway Finance Inc. financial subsidiary at spreads tighter than originally expected.

Warren Buffett and friends sold some $1.5 billion senior unsecured noted broken into 3-parts:

  • 3-Year floating rate $375 million at LIBOR+33 basis points;
  • 3-Year fixed rate $375 million at +58 basis points over Treasuries;
  • 10-Year fixed rate $750 million at +95 basis points over Treasuries.

The ratings are as follows: Moody’s/S&P/Fitch as Aa2/AA+/A+ and all with Stable ratings.

The importance is not just that Berkshire Hathaway sold the bonds,  The notion that the bonds were sold at tighter spreads over Treasuries shows that demand is still there for quality fixed income instruments.

The joint book-running managers were listed as Goldman Sachs, J.P. Morgan Securities, and Wells Fargo Securities.

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JON C. OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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