Report Buffett Is Buying Debt Boosts Qwest Bonds

Qwest Communications International Inc.’s bonds rose Wednesday after a report that billionaire investor Warren Buffett has been buying debt of the troubled Denver-based telephone company.

Buffett, the chairman and chief executive of Berkshire Hathaway Inc., has purchased hundreds of millions of dollars of Qwest debt in recent weeks, CNBC reported, citing traders. The notes, which started the year at about 98 cents on the dollar, have slumped amid falling profit at the company and an investigation by the Securities and Exchange Commission into its accounting investigation procedures.

“Yes, it’s possible, yes, it’s reasonable, and yes, it’s a positive,” said Joseph Galzerano, a high-yield debt analyst at CIBC World Markets Corp., who has a “buy” rating on Qwest bonds.

Berkshire Hathaway Chief Financial Officer Marc Hamburg declined to comment, saying the company does not discuss its investment portfolio. Qwest spokesman Steve Hammack said he couldn’t confirm or deny the report “because I don’t know.”

Qwest’s 7.25% coupon notes maturing in 2011 rose 2.5 cents to 39 cents on the dollar, traders said. The company’s shares closed at $1.28, down 1 cent, on the New York Stock Exchange after rising as high as $1.60 shortly after the television report.

Investors are concerned about a potential loan default. Qwest, which said it will restate results after misreporting sales for 1999 to 2001, has $22 billion of bonds outstanding.

Buffett has purchased notes of both the Qwest Communications holding company and its regulated operating subsidiary, Qwest Corp., CNBC reported.