The ‘Bigger They Are The Harder They Fall’ bet (UPDATED)

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.

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