Warren Buffett’s Berkshire Hathaway risks being downgraded by ratings agency Standard & Poor’s, after its record deal to buy aerospace manufacturer Precision Castparts.
The acquisition worth $37.2bn has caused S&P to worry about Berkshire Hathaway’s cash resources, putting it on "CreditWatch Negative". The company is currently rated "AA", the third-highest of 10 possible ratings.
Although Buffett’s conglomerate sits pretty atop a nearly $70bn cash pile, the ratings agency is concerned about the effect such a large deal will have, writing in a statement:
The CreditWatch placement reflects uncertainty around the funding of the acquisition and how it may affect current cash resources and leverage metrics at the holding-company level.
Berkshire Hathaway has previously said it plans to use around $23bn of its cash resources to fund the acquisition, borrowing the rest.