TXU and CSFB form energy trading company

Dallas-based TXU has entered into a joint partnership with Credit Suisse First Boston (CSFB) to create an independent entity to market and trade power, natural gas and other energy-related commodities in North America.

The transaction will effectively create an Aa3/A+ rated entity through a guarantee from CSFB. The idea is to marry TXU's energy expertise with CSFB's energy banking franchise, structuring skills, credit strength and risk distribution channels.

The two companies intend to work out the final details of the deal during the coming months, with the goal of becoming operational by September 30.

CSFB's entry to the energy trading market follows a spate of similar moves by other banks looking to fill the void left by the departure of energy merchants. ABN Amro, Macquarie and UBS are among those banks to enter the market within the past year. Other institutions such as Deutsche Bank and JP Morgan Chase are increasing their market presence.