Thames Water - comment

We missed it. On our shelf is the analysis of Thames Water from January 2000 when we decided not to go short the bonds then. You’ll find Southern Water there too. Now Sarah Bentley has stepped down as CEO following a capital injection of £500m last year and a pledge to inject another £1bn. That pledge however was subject to conditions and clearly those have not been met. Ofwat, the regulator, has raised concerns over Thames Water, Yorkshire Water, SES Water and Portsmouth Water and S&P have indicated a possible downgrade of the mostly BBB rated structure. Sky News yesterday night reported that "the government has begun to draw up contingency plans for the collapse" of the company and that White Hall is discussing entering the company into Special Administration - as used for Electricity supplier Bulb in 21/22 which ended with its sale to Octopus Energy. Note that a more recent Special Administration of Sova Capital resulted in the UK’s first ever credit bid. Kemble 26s are quoted down 35 points around 50p/£ as the holding structure might be outside the Special Administration Perimeter.