Following in the greatest of capitalist traditions, the Oracle of Omaha announced plans to buy up the shares he doesn’t already own in one of the country’s biggest railroads, Burlington Northern Santa Fe. And in an egalitarian, if unexpected, move, he said he would split his Class B stock to the tune of 50-to-1, making it possible for just about anyone to own Berkshire Hathaway’s traditionally lofty shares.

The railroad purchase is a bet on the future of America, Buffett said, and it’s his biggest acquisition ever. It values the railroad at $34 billion, and the price of $100 a share is a premium of nearly 32 percent. The premium vaults the railroad into the top spot by market cap, surpassing Union Pacific.

Buffett also owns stakes in other railroads, so it will be interesting to see if his move stirs any antitrust comments from Washington. Idiomatically, there is something profoundly rural in the Americana of Buffett’s latest bet; much more so than Berkshire Hathaway’s mainstay insurance business.

Breakingviews.com has compiled a list of unappreciated heroes of the financial crisis: “Some Good Names in a Year Gone Bad.”

Can you match up the undersung HOFers with their acts of contrarian bravery, as selected by breakingviews’ Antony Currie, Rob Cox and (formerly of Reuters) Jeffrey Goldfarb?

1. Tom Scholar

2. Jeff Kronthal

3. Harry Markopolos

4. Peter Wuffli

5. Greg Fleming

6. Jed Rakoff

A. Options trader who warned the SEC about Bernard Madoff’s Ponzi scheme

B. Merrill Lynch executive who warned his bosses about taking on too much risk

C. Former Merrill president who convinced CEO John Thain to accept an acquisition by Bank of America

D. Federal judge who challenged a settlement between the SEC and Bank of America

E. Former UBS boss who gave up a 12 million Swiss frank bonus after being ousted for, ahem, being too risk-averse

F. British civil servant who was a primary architect of the country’s life-support system for banks

I’m sure we are all comfortable within the confines of the honor system, so no Googling allowed. Read the answers — and nominate your own candidates — in the comments section.

It may have only been about two percent of his holdings in the rating agency, but Warren Buffett’s decision to pare back his stake of Moody’s smacks of capitulation after a Manhattan judge ruled that just because they write opinions does not necessarily afford the much-maligned credit grading industry first-amendment protection.

Buffett‘s Berkshire Hathaway said in a filing it had sold 794,388 Moody’s shares on Sept. 1 and Sept. 2, chiseling its holding down to 39,219,312 shares. This isn’t the first time the Oracle of Omaha has seen fit to shave his share of the rating agency. Many will say these incremental measures are not a signal of a loss of faith in the business. But one could argue that the small sales serve less of a financial purpose than they signal slipping confidence. Even Buffett has said Moody’s damaged its brand by providing inaccurate ratings of SIVs, CDOs, CDSs and ETCs — the acronyms of mass financial destruction in the markets’ meltdown.

U.S. District Judge Shira Scheindlin in Manhattan said ratings on notes sold privately to a “select” group of investors were not “matters of public concern” deserving of traditionally broad protection under the First Amendment of the U.S. Constitution. Shares of both Moody’s and McGraw-Hill, which owns Standard and Poor’s, slid in response.

Buffett may yet sense a brighter day on the horizon once the lawsuits are settled. Bond market investors can’t really do without rating agencies, so any improvements to their ability to spot and give appropriately poor grades to cruddy paper could spark a quick turnaround in rating agencies’ fortunes.

If it’s Friday it must be Thomson Reuters Investment Banking Scorecard day. There’s a slogan for you. Anyway, here are the highlights:

“Industrial Sector ECM Shows Increase Over Last Year

Bolstered by this week’s follow-on offering from Japanese airline services provider All Nippon Airways for $1.5 billion, total equity capital markets activity across the industrials sector reached  $26.5 billion, a 2% increase from the same period last year when volume was $25.9 billion.

Other large equity offerings this week came from Asian issuers including $5.5 billion from Japan’s Mizuho Financial and $1.5 billion from India’s Sterlite Industries, bringing weekly volume for the region to $9.8 billion, the second biggest week this year.

UK Target M&A Volume Rises 39% Over Last Year

Two United Kingdom target deals fell among the biggest M&A transactions of the week including the $2.7 billion acquisition of insurance company Friends Provident by investment management services provider Resolution and the $1.7 billion purchase of oil and gas exploration company Venture Production by domestic rival Centrica Resources.

Year-to-date United Kingdom target M&A is up 39% over last year.  Deals in the financials and materials sectors account for the bulk of activity with a combined 82% of volume.

US Debt Volume Falls to Seven Month Low

US debt volume totals $5.4 billion so far this week, the slowest weekly level so far in 2009.  The largest US transaction of the week was a $1.3 billion investment grade offering from medical technology company Care Fusion followed by a $1 billion note from Fannie Mae.

Global debt volume is up 13% so far this year while activity in the US is down just 1%.  Corporate and agency debt have driven global volume, accounting for 75% of total proceeds year-to-date.”

As an aside, impressive as the leap in UK M&A volumes may be, both Resolution-Friends and Centrica-Venture are by no means done deals. In fact, as I wrote earlier, these and other situations — notably Xstrata’s proposed merger with Anglo American — point to a pickup in unsolicited and sometimes downright hostile bid activity.

*This post was updated after the bond priced*

British Airways unveiled a $1 billion fundraising aimed at securing its future earlier on Friday, including $540 million in bank loans that had been earmarked for its pension funds as a safety net against the airline going bust.

The fundraising also included a 350 million pound ($570.5 million) convertible bond, which was over 7 times covered, pointing to healthy investor appetite.

Convertible bonds have become an increasingly important source of finance for firms in Europe. The instrument allows companies to raise capital paying less interest than standard bonds, while avoiding an immediate dilution of earnings per share because investors look to gains in share prices over a medium term.

With European stocks rallying some 33 percent since early March, the convertible market has rebounded with year-to-date issuance reaching $16 billion including the BA deal, according to Thomson Reuters data.

The convertible was the third UK deal this year and BA’s first in 20 years. It was arranged by Barclays Capital, Deutsche Bank, HSBC, Merrill Lynch and RBS Hoare Govett.

The coupon of the 5-year convertible was priced at 5.8 percent, and a conversion premium of 37.6 percent.
The deal, which attracted strong support from both long-only funds and hedge funds, was priced after the issuer tightened the indicative range of the coupon to 5.5-5.875 percent, while the conversion premium was revised to 36- 38 percent. The deal was originally launched with a coupon range of 5.5-6.25 percent and a conversion premium of 30-38 percent.

BA’s convertible followed Air France’s 661 million euro deal launched on June 18.

Air France’s convertible, arranged by Societe Generale, UBS, BNP, Calyon and Lazard-Natixis, was 9 times covered on an original size of 575 million euros and increased 15 percent in size due to the good response.

Air France’s deal had a coupon of 4.97 percent and a conversion premium of 35 percent. In terms of implied volatility, a yardstick commonly used to measure how expensive a convertible is to investors, BA’s deal was priced at 30.6 percent, compared to Air France’s 27 percent.

Air France’s convertible, maturing 2015, has gained 8 percent since the launch to trade at 108, or 41 percent implied volatility, on Friday.

In the first half, convertibles in the EMEA region (Europe, Middle East and Africa) gained 16.6 percent, according to Barclays Capital. After a summer lull, equity capital markets bankers expect another rush of deals come September.

PepsiCo Inc’s offers to buy its two bottling affiliates has dragged on and on and could be a distraction for the companies as they begin planning for 2010.
    
Bill Pecoriello, CEO of ConsumerEdge Research, said he believes PepsiCo would only be willing to raise its offer 10 percent and that would be insufficient to entice Pepsi Bottling Group to the negotiating table.
    
Pecoriello said the soda saga has dragged on longer than he expected and there’s no catalyst in sight to trigger talks. 
    
“The biggest worry is that it becomes a distraction. You get to the point when you have to start planning for 2010 and everyone is in limbo,” Pecoriello said.
    
PepsiCo’s strategy could be to let time pass and hope PepsiBottling’s shares drift lower — making the $29.50 per share offer look more enticing. Still, PepsiCo has room to raise its offer and it would be attractive for the soda giant even if it paid in the upper $30-per-share range, Pecoriello said. PepsiCo could afford to pay in the high $20-per-share range for PepsiAmericas.
    
If PepsiCo walked away from the deal, it would have to invest $400 million to improve the performance of its North American beverage business, he said. Rival Coca-Cola is gaining momentum and could pressure PepsiCo.
    
PepsiCo has said its offers were “full and fair.”

General Motors is back in bankruptcy court on Wednesday, seeking approval to sell its choice assets to a “New GM” in a plan to reinvigorate the automaker under U.S. government ownership.

Reuters reporters Emily Chasan and Phil Wahba will be filing updates from the hearing in the live headline box below and on the DealZone Twitter feed.

Blackstone co-founder Peter Peterson tells all about the runup to the firm’s 2007 IPO in a book to be published June 8.

“The irony did not escape me that a private equity firm, which emphasized why their private companies did better over the longer term, should be going public,” he writes in The Education of an American Dreamer.

Blackstone’s June 2007 IPO made Peterson a billionaire and put him, and CEO Steve Schwarzman, firmly into the public spotlight.

But Peterson, who retired in 2008 as Blackstone’s Senior Chairman, writes that none of them anticipated the “firestorm” that followed Schwarzman’s lavish 60th birthday party, held at New York’s Park Avenue armory which included a guest list of celebrities and financiers.

“I was at the same table as Jack Welch and LIz Smith,” he writes. “Though they said little, their eyes said a lot. We just knew it was one of the most expensive parties we had ever been to. Yet I don’t think any of us anticipated the press firestorm that followed.”

Peterson said he was “simply astonished” when Blackstone’s underwriters valued the company at $31 billion and describes the day of the IPO when he called his bank to make sure that the wire transfer of proceeds of his sale of Blackstone shares had gone through. “I was an instant billionaire!” he recounts.

But Peterson, who has pledged much of his wealth to philanthropy, notes the aftermath:

“The clouds of the populist storm swirled and deepened and, in the wake of our public offering and the now famous public sixtieth birthday party, came down on the private equity industry in Washington. At issue is a proposal to more than double the tax on gains made from carried interest, the term used to describe the share — generally amounting to 20 percent — of any profits that private equity managers realize, above some fertile or minimum annual rate of return of 8 percent to 9 percent. For reasons that strike me as unfair, and bad tax policy, the tax increase would not apply to thousands of real estate, oil and gas, resource and family partnerships that are identical in structure to the private equity partnerships. Whatever the outcome, it will prove to be a difficult, defining political battle.”

He continues that given the huge inequality of income in America “I can certainly understand the argument that a genuine fat cat such as myself should pay more taxes. The question is, What is the right way to go about it?”

“My position on the need to increase revenues, including increasing marginal taxes on us fat cats, ideally in conjunction with spending restraints, is greeted with very restrained enthusiasm by my Wall Street and Republican friends,” he writes.

He foresees that in the short to medium term, the restructured banks, tough fund-raising environment, more regulation and higher taxes would “greatly complicate the outlook and management of private equity firms.”

Reuters received an advance copy of the book, published by TwelveBooks on Wednesday, and has not yet read the whole book. Extracts are taken from a chapter entitled “Becoming a Force” which focuses on his years at Blackstone. Picture taken from TwelveBooks’ website.

Auto insurer Nationwide has joined businesses such as Kraft Foods, eBay and Amazon.com in developing applications that customers can access on Apple’s popular iPhone.

While Kraft’s iFood Assistant offers recipes and shopping lists for consumers, Nationwide’s application gives policyholders instant tools to help deal with some of the calls and paperwork that follow a vehicle bust-up, including access to tow truck service, and getting a claim started.

Nationwide says it is the first insurer to launch such an application, or “app” as iPhone tools are more often referred to.

Policyholders that download the free iPhone application may appreciate the Nationwide tool even if calamity never strikes, since it also features a virtual flashlight that turns your screen to maximum brightness when you need more light.

Remember a couple of years ago, when it was discovered that an executive used his corporate American Express card to pay for $241,000 worth of “services” at a New York-based “gentleman’s club” then tried to stiff AmEx on paying the bill?

How might someone explain a $241,000 charge on his or her statement, to his or her boss (or his or her spouse, for that matter)when it gets sent to the home office — or worse, the home — at the end of the month?

“Wow, those steaks really WERE expensive.”

“We all had dessert.”

“There must be a missing decimal point somewhere. I hope.”

Well now, that problem might be a little easier to manage as American Express said on Tuesday it will no longer send paper copies of their bill to clients at large companies.

Now, some people like to get their AmEx bill in paper form and some people won’t mind that bill floating around the office … or the living room.

Anyway, what are your thoughts? Will you miss the paper statement or will the online version be just fine?  Should AmEx rethink this decision?