Moody's may upgrade BNSF rating on Berkshire deal

NEW YORK, Nov 3 (Reuters) - Moody's Investors Service said
on Tuesday that it may raise its ratings on Burlington Northern
Santa Fe Corp BNI.N after Berkshire Hathaway Inc
(BRKa.N)(BRKb.N) said it would acquire the company.

Billionaire investor Warren Buffet's Berkshire said it
would acquire the nation's largest rail company for $44
billion, which includes all existing BNSF debt.

Moody's said it may upgrade BNSF's senior unsecured debt
rating, which the agency now rates at Baa1.

"If Berkshire's stated goals and financial policies for
BNSF permit greater reinvestment in the business and exclude
any greater levels of distributions or return of capital to
shareholders ... the ratings could be raised," Moody's said in
a statement. It said an increase would be unlikely to exceed
one notch to Baa2.

The agency said that previous constraints on BNSF's
capability to return a substantial portion of free cash flow to
shareholders through aggressive share repurchases could be
significantly reduced after the acquisition.

The deal gives BNSF the potential to boost investments in
its business while maintaining its debt capacity, making for
greater competitive edge against other North American
railroads, Moody's said.
(Reporting by Camille Drummond; Editing by Leslie Adler)