The turmoil in the credit markets this past summer had an early victim: the debt used to finance highly leveraged giant buyouts.

Investors' reluctance to purchase buyout debt has virtually frozen deal making and made financing the transactions that were negotiated before the credit crunch very tricky.

But now an investor world famous for being cautious and focused on the long term, Warren Buffett, is apparently buying deal debt.

Peter Eavis of Fortune reports that Buffett's Berkshire Hathaway invested more than $2 billion last week in high-yield, or junk, bonds being issued by the new owners of TXU, the Texas energy giant.

The $45 billion acquisition of TXU by a group led by Kohlberg Kravis Roberts was the biggest buyout ever. The company has been trying to sell $26 billion in loans and $11 billion in bonds to finance the buyout.

Buffett's purchase may be a sign that investor appetite for riskier debt is returning. And it will be greeted with relief by banks, as it suggests that they now will be able to move the many loans that they made to finance such huge deals, and were forced to hang on to, off their books. In recent months, many Wall Street banks have had to write down the value of their leveraged loans, as well as the value of their investments tied to mortgages.

Berkshire Hathaway, according to Eavis, bought $1.1 billion worth of 10.25 percent bonds at 95 cents on the dollar for an effective yield of 11.2 percent. It also bought $1 billion worth of 10.5 percent pay-in-kind toggle bonds, whose interest can be paid out in more bonds, for 93 cents on the dollar, producing an effective yield of 11.8 percent.

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