Fitch cuts Berkshire rating two notches to AA-

NEW YORK, Feb 10 (Reuters) - Fitch Ratings on Wednesday cut Berkshire Hathaway Inc.’s investment-grade rating by two levels due to Berkshire’s acquisition of Burlington Northern Santa Fe Corporation, Fitch said.

Berkshire’s issuer default rating was cut two notches to AA-minus, the fourth-highest rating, from AA-plus. Fitch said the rating outlooks for Berkshire and key insurance units remain stable.

Fitch had placed its ratings on Berkshire and its insurance subsidiaries on notice for potential cuts on Nov. 5, after Berkshire and Burlington Northern Santa Fe Corporation announced they had entered an agreement in which Berkshire would acquire the 77 percent of Burlington shares it did not already own in exchange for cash or shares.

Pending shareholders’ approval, they plan to close the transaction on Feb. 12.

“The downgrades reflect Fitch’s concerns about the acquisition’s effect on Berkshire’s asset profile, capitalization and interest coverage,” Fitch said.

Fitch views the acquisition, along with Berkshire’s investments in utilities and energy and finance company subsidiaries, “as increasingly shifting the company’s overall asset profile toward concentrated investments in operating subsidiaries with comparatively lower credit-quality and less liquidity” than the company’s long-held insurance and equity-oriented investments, Fitch said.

Reporting by Walden Siew; Editing by Dan Grebler