I must have neglected to copy you on the disapproval rationale for Duke 
Energy Trading & Marketing, LLC.  This entity does not prepare (for the 
public anyway) independent financial statements.  S&P has assigned its rating 
based on affiliation with and implied support and capitalization from Duke 
Energy, Inc.  Financial statements have been a requirement for all reference 
cps.

I would think that pricing such a credit would be extremely difficult, since 
this would essentially require estimating the probability that Duke Energy 
would honor this entity's obligations in the event of financial distress.  In 
addition, the probability that such support would be needed is completely 
unknown, since no financials are available for Duke Energy Trading & 
Marketing.

Rod





John Metzler
03/04/2000 07:43 AM
To: Mark Taylor/HOU/ECT@ECT
cc: Edmund Cooper/LON/ECT@ECT, Rod Nelson/HOU/ECT@ECT, Bryan 
Seyfried/LON/ECT@ECT 
Subject: Re: Indicative request to buy  


Mark & Rod:

If  I read correctly the earlier note from Rod, there are questions about 
Duke Energy Trading & Marketing as a reference entity -- there has been no 
decision of disapproval.  

I f you have decided not to approve them, then please inform me directly.  
And please tell me why.

In general, what drives the approval decisions?  This is important to know to 
make the front end of transactions more intelligent about these affairs, and 
to forestall any antagonism within the firm.

Also, bear in mind this is an off-line reference entity





To: Edmund Cooper/LON/ECT@ECT
cc: John Metzler/LON/ECT@ECT, Rod Nelson/HOU/ECT@ECT 

Subject: Re: Indicative request to buy  

Edmund:

Rod Nelson has just informed me that Credit will not be approving Duke Energy 
Trading & Marketing as a reference entity.  I don't think it makes sense to 
review the various Duke confidentiality agreements at this point.  Please let 
me know if the situation changes.

Mark



Edmund Cooper
03/03/2000 01:40 PM
To: John Metzler/LON/ECT@ECT
cc: Mark Taylor/HOU/ECT@ECT 
Subject: Re: Indicative request to buy  

There are a variety of CAs with U.S. Duke Energy entities.   

Mary J. Heinitz has provided me with a list of these which I'll forward to 
Mark for his consideration under the cover of a separate email.

Thanks, Edmund.




John Metzler
03/03/2000 02:27 PM
To: Edmund Cooper/LON/ECT@ECT
cc:  

Subject: Re: Indicative request to buy


Edmund, 

Please review the CA implications, as stated below.

Thanks
John


---------------------- Forwarded by John Metzler/LON/ECT on 03/03/2000 14:26 
---------------------------


Tomas Valnek
03/03/2000 13:29
To: Martin McDermott/LON/ECT@ECT, John Metzler/LON/ECT@ECT
cc:  

Subject: Re: Indicative request to buy


---------------------- Forwarded by Tomas Valnek/LON/ECT on 03/03/2000 13:30 
---------------------------
From: Rod Nelson on 02/03/2000 10:01 CST
To: Tomas Valnek/LON/ECT@ECT, Bryan Seyfried/LON/ECT@ECT
cc: Paul Simons/LON/ECT@ECT, Mark Taylor/HOU/ECT@ECT, William S 
Bradford/HOU/ECT@ECT, Edmund Cooper/LON/ECT@ECT, Debbie R 
Brackett/HOU/ECT@ECT 

Subject: Re: Indicative request to buy  

Unfortunately, it's not quite that simple.  Duke Energy Trading & Marketing 
is a marketing sub and does not prepare separate financials.  The S&P rating 
is based on an implied guaranty from Duke Energy.  Legal would also need to 
review this counterparty from the standpoint of confidentiality agreement 
violations. 

Also, as a trading counterparty, Sempra Energy Trading is not authorized for 
credit derivative trading, because the existing guaranty does not explicitly 
cover this type of transaction.  If Sempra wishes to transact out of this 
entity, we can look into amending the guaranty to cover this product.  This 
will require legal efforts and approval.

Rod




Tomas Valnek
03/02/2000 08:36 AM
To: William S Bradford/HOU/ECT@ECT, Debbie R Brackett/HOU/ECT@ECT, Rod 
Nelson/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Paul Simons/LON/ECT@ECT, Edmund 
Cooper/LON/ECT@ECT
cc: John Metzler/LON/ECT@ECT, Martin McDermott/LON/ECT@ECT 
Subject: Indicative request to buy

Both of  these entities have an E-rating of 3. Any issues?

Tomas


---------------------- Forwarded by Tomas Valnek/LON/ECT on 02/03/2000 14:36 
---------------------------


John Metzler
01/03/2000 15:41
To: Martin McDermott/LON/ECT@ECT, Tomas Valnek/LON/ECT@ECT
cc:  

Subject: Indicative request to buy


Reference Name:  Duke Energy Trading & Marketing (sub of Duke energy -- he 
claims they have their own debt)
Counterparty:   Sempara Energy Trading
Term:    2 years
Notional Amount:  $2 million (I made that up)

John