Berkshire risks S&P rating cut on leverage from Buffett deal

Warren Buffett's Berkshire Hathaway Inc. may be downgraded by Standard & Poor's after agreeing to buy Precision Castparts Corp. for about $37.2 billion.

Buffett's company was put on CreditWatch Negative because of "uncertainty around the funding of the acquisition and how it may affect current cash resources and leverage metrics at the holding-company level," the ratings firm said in a statement Tuesday on Omaha, Nebraska-based Berkshire. "To fund the acquisition, Berkshire is likely to use some of the capital resources available at its insurance companies."

Berkshire has a AA rating from S&P, the third-highest of 10 investment grade levels. The company was stripped of its AAA rating in 2010 after agreeing to buy railroad BNSF.

Buffett's company had more than $66 billion in cash as of June 30. He has said he plans to use about $23 billion of that for the Precision Castparts deal and borrow about $10 billion. The target company also has more than $4 billion of debt.

S&P said it expects to update or resolve the CreditWatch listing within 90 days following discussions with Berkshire management. The ratings firm said it could affirm or lower the rating, after its review.

Buffett didn't immediately return a message left with an assistant seeking comment on S&P's stance.