Standard & Poor's on Thursday stripped Warren Buffett's Berkshire Hathaway Inc of its top AAA rating, saying its acquisition of Burlington Northern Santa Fe will hurt liquidity and capital adequacy.

The rating agency cut Berkshire's long-term counterparty credit rating by one notch to AA-plus. The outlook is stable, which typically means that S&P does not expect another rating action over the next two years.

Counterparty credit ratings reflect how well a company can meet its financial obligations with customers, trading partners or other parties.

We believe that the railroad acquisition will reduce what historically has been extremely strong capital adequacy and liquidity, and that investment risk with sizable concentrations remains very high, S&P said in a statement.

The rating downgrade came on the same day that Berkshire announced a bond sale of up to $8 billion to help pay for the Burlington acquisition.

Berkshire is buying Burlington , the second-largest U.S. railroad company, for roughly $26 billion in stock and cash.

A key concern is that Berkshire's risk tolerances appear to have increased, yet we believe they remain ill-defined while the organization increases in complexity, S&P said.

S&P is the third major rating agency to cut Berkshire's top AAA rating. Moody's Investors Service on April 8 cut Berkshire's rating to Aa2, its third-highest rating, citing the impacts of the recession and investment losses at Berkshire's insurance operations. Fitch cut Berkshire four weeks earlier to AA, its third-highest rating.

Earnings at Berkshire remain very strong and are likely to increase following the acquisition of Burlington, S&P said.

It is our expectation that Berkshire likely will use these incremental earnings and cash flows to pay down the debt resulting from the acquisition rather than rebuild insurance company capitalization, S&P said.

Uncertainty about management succession after Buffett, who is 79, eventually steps down is also an ongoing concern, the rating agency said.

(Reporting by Dena Aubin; Editing by James Dalgleish)

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