Warren Buffett’s Berkshire Hathaway Inc. will sell debt, in what may be the conglomerate’s biggest bond sale, in part to repay a $10 billion loan used to finance its purchase of Precision Castparts Corp.
Berkshire may sell the debt in up to eight parts as soon as today, according to a person with knowledge of the matter. Buffett had said earlier that Berkshire used about $23 billion of its cash for the deal and will borrow the rest.
The one-year loan was provided by lenders led by Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co., according to data compiled by Bloomberg.
The takeover is one of the largest by Buffett. Omaha, Neb.-based Berkshire has been using a cash pile that climbed to more than $66 billion as of June 30 to acquire industrial companies. The bond offering comes after Standard & Poor’s said on Feb. 19 that the company’s AA rating was no longer at risk of being downgraded due to the takeover.
"The market has opened back to companies with strong ratings," said Jody Lurie, a credit analyst at Janney Montgomery Scott. "They are higher grade than most companies, they’ve had their ratings confirmed and there is a lot of demand for high quality, well known names."
The longest part of the offering will be 10-year bonds that are being offered at a yield of 1.55 percentage points more than similar-maturity Treasuries, said the person, who asked not to be identified because the information is private.