Updated to include Wells Fargo comments
NEW YORK ( TheStreet) -- Wells Fargo (WFC) struck Wall Street gold when it won a key advisory and financing mandate on Berkshire Hathaway (BRK.A) and 3G Capital's $28 billion acquisition of ketchup maker Heinz (HNZ).
While Wells Fargo's advisory work on the buyout and a key role in underwriting the $14.1 billion in debt needed to finance the deal could indicate the benefits of having Berkshire and its head, Warren Buffett, as a top shareholder, it also creates new risks, according to ratings agency Moody's.
Moody's on Monday said Wells Fargo's role in the takeover of Heinz indicates the increasing presence of the nation's top mortgage lender in risky Wall Street activities such as leveraged buyout financing and debt trading. Such a move, Moody's says, could boost Wells Fargo's risk profile and put its sterling A2 credit rating in jeopardy."The financing is credit negative because it highlights Wells Fargo's primary capital market capabilities, which are lucrative but can lead to riskier activities," Peter Tischler, a Moody's senior vice president, said in the note. "The Heinz credit commitment plays to Wells Fargo's strengths. However, the size of the deal, combined with Heinz's more stressed credit profile as a result of the higher leverage it will take on, poses risks."
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