According to the latest issue of Barron's, it looks like buyout loans could be headed for trouble.
Well, that's not scaring investment maestro, Warren Buffett. Actually, he's getting interested in the sector. A report from Fortune indicates that Buffett, through Berkshire Hathaway, has purchased more than $2 billion in the debt of TXU, the massive energy provider.
The TXU deal, which was priced at $45 billion, was spearheaded by KKR and TPG, and the deal closed in October. Of this, about $26 billion was composed of debt financing.
So, is Buffett's move a signal that the credit crunch is less than fatal? Not necessarily. Keep in mind that he's a long-term investor -- and definitely sees some value in the TXU bonds. After all, the company has a dominant position in the Texas market. Besides, Buffett likes utilities.
Nonetheless, it's still good news. Wall Street needs to unload tons of buyout debt for existing deals (especially for risky bridge loans) -- and, so long as the price is right, there are buyers coming to the table.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
12-03-2007 @ 2:33PM
Arohan said...
Good move by WEB! Utility bonds are generally solid investments (if unspectacular) and with the current market malaise, he got a good price. And he is doing his part to impart some liquidity in commercial paper
http://arohanvalue.blogspot.com
12-03-2007 @ 6:55PM
Robert Latson said...
Can anyone tell me what company acquired the symbol JAVA? What is the new symbol or company name?