Warren Buffett's $8 billion loan
Buffett's Berkshire Hathaway gets a short one-year term at very low rates. Why not longer?
The loan isn't a surprise, especially for a $26 billion purchase. But what has some people puzzled is the loan's term: one year. Why so short?
The interest rate is 1 percentage point to 2 percentage points more than the London interbank offered rate, which is down to about 0.27 percent.
"Isn't borrowing short-term at a low interest rate to buy a long-term asset what caused a lot of problems for housing buyers?" asks Robert Wenzel of EconomicPolicyJournal.com. "I certainly hope Buffett isn't expecting interest rates to be lower one year out."
Wenzel guesses that Buffett's going to free up some other cash to pay the debt, and is using the one-year loan as a bridge in the meantime.
Buffett has “got to have a Rolodex full of potential creditors,” one analyst told Bloomberg. “If he doesn’t like the terms of one, he’ll call the next one.”
- Buffett admits railroad 'not a bargain'
- Even Warren Buffett shops at Wal-mart
- Professor Buffett tutors Goldman Sachs
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The Fed may start tapering in just a few months. Here are a few of the likely winners and losers.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.