Buffet's firm signals end to the downturn

NEW YORK: Berkshire Hathaway Inc said "the credit crisis has abated", bolstering the firm's earnings potential after Chief Executive Officer Warren Buffett agreed to pay $26 billion and take on debt to fund his biggest takeover.

Improvements in the creditworthiness of US companies helped triple third-quarter profit, announced by Berkshire in a Nov 6 filing, and provide a cushion for Buffett as he buys railroad Burlington Northern Santa Fe Corp. Berkshire made the comment on credit markets in the same filing, saying that "interest rates for investment grade issuers relative to government obligations have declined".

Refinancing costs for municipalities and the riskiest corporate borrowers plunged, reducing the chance Omaha, Nebraska-based Berkshire will have to pay out on protection it sold against defaults. After a second straight profit increase, Berkshire is risking its AAA credit grade by borrowing about $8 billion for the purchase of Fort Worth, Texas-based Burlington, a deal Buffett called an "all-in wager" on the US economy.