In a large bowl, dissolve the yeast and sugar in the warm water. Proof for 5 minutes.
Mix in butter or margarine, flour, and salt. Cut dough into short strips, roll into ropes, and shape into pretzels. Cover, and let rise on a greased baking sheet for about 45 minutes.
In a cast iron or other nonaluminum pan, bring water and baking soda almost to a boil. Gently lower pretzels into water for about 1 minute, turning once. Do not let water come to a full boil. Remove pretzels, and return to greased baking sheet. Sprinkle with kosher salt.
Bake at 475 degrees F (245 degrees C) for about 12 minutes.