Warren Buffett is older and perhaps wiser than US President Barack Obama. But is the Sage of Omaha, at the helm of a company boasting revenue only worth $107 billion, creditworthier than the leader of an economy boasting an output of $14 trillion? The US bond market thinks so.
Bloomberg data this week shows that two-year bonds floated by Buffett’s Berkshire Hathaway last month trade at 0.03 percentage points lower than similar US treasurys. That means the market considers Berkshire less risky, and less prone to default, than the US government in this period. Three other US firms enjoy similar credit.
This is “exceedingly rare” in the bond market’s history, one analyst noted. Bonds floated by the US government, whose currency is reserve for the world, are usually considered the world’s safest bet.
Now investors are training their sights on Obama’s gaping budget deficit, to which his healthcare package, passed on Sunday, adds $938 billion in the next 10 years. As their focus shifts from private to government balance sheets, treasurys are going from “safe havens”, as they were at the height of the 2008 panic, to any other AAA investment.