TXU Debt Sale Set for Monday

Banks will start selling debt tied to TXU's (TXU Quote) leveraged buyout Monday, TheStreet.com has learned.

Chatter in the market placed the kickoff of the billion-dollar buyout financing sometime this week. But the bank group helping to finance the transaction, which includes Citigroup(C Quote) and JPMorgan Chase (JPM Quote), is now looking at a Monday launch. TXU, a big Texas utility, is being purchased by a group led by Kohlberg Kravis Roberts, Goldman Sachs and TPG Capital.

Citi and JPMorgan are expected to sell some $5 billion of loans to help finance the private equity group's $32 billion acquisition. Credit Suisse (CS Quote) is also involved in the deal, representing TXU.

Banks involved in the deal either declined to comment or did not return calls.

Buyers of TXU agreed to purchase the energy outfit in February and have received the bulk of the regulatory approvals necessary to complete the deal. The big issue for the buyout team is a high-yield credit market that has been seized up for much of the summer.

Banks that offered debt to buyout shops on loose terms are still stuck with more than $300 billion in LBO debt that they hope to sell into the market.

Lack of confidence in the quality of these loans has made it difficult for bankers to unload them. Even after bankers sold $9.4 billion of debt tied to another recent private equity buyout, KKR's purchase of First Data, potential investors are still skittish about the quality of the paper they might be purchasing and how the price of these securities might hold up after financiers get them off their books.