Fitch Affirms Welsh Road Funding LLC Series 2010-1 [Professional Services Close – Up]

Fitch Ratings has affirmed the rating on the following notes issued by Welsh Road Funding LLC:

--Series 2010-1 commercial paper (CP) notes at 'F1+sf'.

The affirmation is based upon the rating of the guarantor of the surety, Berkshire Hathaway Inc. (BHI; Fitch Issuer Default Rating [IDR] of 'AA-' with a Stable Outlook). Fitch considers BHI to be an eligible direct-support counterparty based on the strength of its long-term 'AA-'IDR and Stable Outlook. A long-term rating of 'AA-' correlates to a short-term rating of 'F1+', but lower long-term ratings have a correlation that may overlap multiple short-term ratings. Specifically, a one-notch downgrade of BHI's long-term IDR to 'A+' from 'AA-' may result in an 'F1sf' or 'F1+sf' CP rating. Such a determination would be decided by a ratings committee, taking into consideration input provided by Fitch's Corporates Group regarding the short-term financial position of BHI. Additional information on long- and short-term ratings correlation can be found at 'fitchratings.com'.

The notes are supported by a $2.5 billion unconditional and irrevocable surety issued by Columbia Insurance Company (Columbia; Insurer Financial Strength [IFS] rating of 'AA+' with a Stable Outlook), which is further enhanced by a corporate guaranty made by BHI.

The issuer is a bankruptcy-remote, special purpose, limited liability company established to issue the CP notes, the proceeds of which will be used to purchase up to $2.5 billion in variable funding note (VFN) advances issued by Berkadia Proprietary Holding LLC (Berkadia, or the VFN issuer). Any CP notes issued to fund the purchase of VFN advances will be match-funded to mitigate the risk of interest and maturity mismatches between the CP and VFN. Full and timely repayment under the VFN is fully supported by the surety bond, and ultimately the corporate guaranty.

Additional information is available at 'fitchratings.com'.

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