US HIGH YIELD-Buffett report helps TXU bonds

By Dena Aubin

NEW YORK, Dec 3 (Reuters) - Reports that Warren Buffett's Berkshire Hathaway (BRKa.N: Quote, Profile, Research) bought $2.1 billion of TXU Corp's junk bonds gave the utility's debt a boost but may not inspire copy-cat moves into other junk bond issues.

TXU, now called Energy Future Holdings, sold $3.75 billion of bonds last week through its Texas Competitive Electric Holdings unit to help repay debt used for its Oct. 10 leveraged buyout.

CNBC reported on Monday that Berkshire Hathaway bought $1.1 billion of TXU's 10.25 percent (cash-pay) bonds and $1 billion of its 10.5 percent pay-in-kind toggle notes. A spokesman for Berkshire Hathaway could not be reached for comment.

"It probably should help TXU bonds because you've obviously got a strong holder and somebody who's considered a very astute investor buying their paper," said Robert Grimm, co-head of the high-yield group at J. Giordano Securities in Stamford, Connecticut. "But it doesn't help the rest of the world."

Buffett told CNBC that the TXU bonds are the only junk bonds he is interested in at the moment, adding that some recent issues give new meaning to the word "junk."

TXU's bonds were little changed on Monday but had risen on Friday on rumors of a major investor being involved in the deal, a trader said.

TIMING GOOD FOR VALUE BUYERS

TXU's 10.25 percent cash-pay notes, issued at 95 cents on the dollar, were quoted around 96.5 cents on Monday, while the 10.5 percent pay-in-kind notes, issued at 93.35 cents, were quoted at 95.5 cents.