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Derivatives

Morgan Stanley To Acquire Duke Energy Trading Book

Morgan Stanley's energy-trading group is set to buy 241 power contracts throughout the U.S. from Duke Energy Trading & Marketing (DETM) and hopes to close the purchase by the end of this month, according to DW sister publication Power Finance & Risk.

Morgan Stanley's energy-trading group is set to buy 241 power contracts throughout the U.S. from Duke Energy Trading & Marketing (DETM) and hopes to close the purchase by the end of this month, according to DW sister publication Power Finance & Risk . The portfolio represents roughly 30% of Duke's entire power contract portfolio, a book that is expected to generate some USD400 million of revenue this year, said market watchers. Pete Sheffield , a spokesman at Duke in Charlotte, N.C., did not return calls on a holiday-shortened week and officials at Morgan Stanley declined to comment.

"Duke has been trying to back out of trading and marketing because it presents credit risk and cash-flow problems," noted a banker who works with the company, "but this is a profitable portfolio if managed by professionals with a good credit rating."

One banker says Morgan Stanley is only buying Duke contracts that are speculative in nature as opposed to those put in place by Duke as commodity hedges for its generation portfolio.

DETM, which markets natural gas and electricity, is 60% owned by Duke Energy and 40% owned by Exxon Mobil .

 

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