The credit markets are unfriendly, even to the big guys.
Ken Griffin’s Citadel Investment Management just had its counterparty rating cut by S&P:
The ratings were cut to BBB from BBB+ on the Kensington Global and Wellington funds, which tumbled about 40 percent this year. Further reductions are possible if the funds, which oversee $13 billion in assets, don’t improve their investment returns, S&P said today in a statement.
Just a smidgen, although when applied across all trades probably isn’t small change. But just to show nobody is immune:
Spreads on insurance against a debt default by Warren Buffett’s triple-A-rated Berkshire Hathaway are trading about on par with that of the embattled General Electric and worse than Goldman Sachs and Citigroup.
Note: with the amount of volatility in the air, the latter issue could work itself out very quickly. As for the former, I just have to wonder how much stock folks put in S&P decisions anymore.
UPDATE: More on the Buffett bet.