Berkshire Hathaway Inc. terminated a large wager on the municipal-bond market five years early, The Wall Street Journal quoted a person familiar with the transaction as saying.In a quarterly regulatory disclosure filed this month, the Warren Buffett-owned company terminated credit-default swaps insuring $8.25 billion of municipal debt.The Journal said the early termination is deepening questions among some investors about the risks of buying debt issued by cities, states and other public entities.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

The Journal quoted the source as saying that Buffett's bet that more than a dozen U.S. states would keep paying their bills on time had been made before the financial crisis.The insurance-like contracts, which required Berkshire to pay in the event of bond defaults, were bought by Lehman Brothers Holdings Inc. in 2007, more than a year before the firm filed for bankruptcy, the Journal quoted the source as saying.Details of the termination, with the Lehman Brothers estate, weren't disclosed. It isn't clear whether Berkshire's move will leave the Omaha, Neb., company with a profit or loss on the wager.Buffett declined to comment on the details of the termination with the Lehman Brothers estate, the Journal added. It is not clear if the move would leave the company with a profit or loss on the wager.Some investors said the decision to end the bet indicates that one of the world's savviest investors has doubts about the state of municipal finances. If so, the move could be a warning to investors who have purchased such debt, the Journal reported.David Kass, a professor at the University of Maryland's Robert H. Smith School of Business who also owns Berkshire shares, told the Journal that Buffett may perceive more risk to municipalities than when Berkshire entered into the positions. Berkshire's move comes as investors are flooding into municipal debt, keeping bond prices high and yields low.Berkshire was not immediately available for comment outside regular office hours.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.