Negotiations over the terms of the financing package for the $45bn buy-out of TXU, the Texas-based energy group, are set to begin after the purchase by Kohlberg Kravis Roberts and Texas Pacific Group received final regulatory approval earlier than expected.

The banks funding the TXU takeover are expected to push for the inclusion of covenants into the loans, the removal of pay-in-kind toggle notes and higher interest payments to make the debt more palatable to investors amid the credit squeeze.