No. of Recommendations: 9
If you wanted to create an income stream with less volatility (rather than hold purely BRK equity), what of the BH subsidiaries' long-term (20-30 year) debt would you hold?
Berkshire Hathaway Finance
Berkshire Hathaway Energy
PacificCorp
Precision Castparts
Lubrizol
BNSF
Currently, BNSF 30 year debt pays a coupon of 5.2% and YTM of 5.46% as its selling to a discount (96.154)
Is there anyone doing this with their retirement portfolio?
No. of Recommendations: 11
I'm sure someone can correct me if I'm wrong, but I believe that the list contains both the recourse and non recourse choices.
BNSF and BHE are responsible for their own debt, and could default without creditors having access to other assets from head office. All others are, I think, backstopped by the parent.
Separately, my uninformed gut feel is that BNSF might be the sweet spot...blowups very unlikely in such a nice boring business (the word "finance" is inherently scary), and perhaps better yields than some of the other choices because the absolute quantity of debt is relatively high.
Jim
No. of Recommendations: 4
That's generally correct. The utilities, BHE, BNSF debt is non-recourse.
However, BHFC debt (used by Clayton for manufactured home financing) is recourse debt. So it does usually trade at a lower yield.
BHFC 2043 debt trades at 5.336% (discount bond 88.032; 4.3% coupon).
It does seem like the parent company guarantee isn't worth more than 30-50 bps.
