Thames Water Utilities Limited's debt

analysisThames Water describes TWUL's "whole business securitisation" as ring-fencing it from the rest of the Kemble group and providing a platform to raise debt from various sources under a set of covenants and security arrangements. Its obligors since 2007 are Thames Water Utilities Holdings Limited (TWUHL), TWUL and Thames Water Utilities Finance plc (TWUF). Each is party to a Security Trust and Intercreditor Deed with the Security Trustee; TWUHL guarantees the other obligors' obligations, TWUL and TWUF guarantee each other, and since 2025 TWUL and TWUHL also guarantee the borrowings of Thames Water Super Senior Issuer plc (TWSSI). ^{1 2 3 4}

analysisThe High Court's February 2025 judgment describes about 60 debt instruments governed together with a Master Definitions Agreement between TWUHL, TWUL, TWUF and Deutsche Trustee Company Limited as Security Trustee, a Security Trust and Intercreditor Deed, a Security Agreement and a Common Terms Agreement; TWUL and TWUF are the issuers, borrowers or hedge counterparties for much of the debt, which totalled about £19 billion, excluding hedging, at 28 November 2024. The liquidity facilities rank first, the hedging agreements second, Class A debt third and Class B debt fourth, with subordinated debt junior to both classes. All but the subordinated debt is secured by first fixed charges over the shares in TWUL and TWUF, the group's land, plant and equipment, bank balances, intellectual property and investments, and by a first floating charge over each group company's whole undertaking. ⁵

analysisAt the time of that judgment the Class A debt consisted of about £16 billion under 53 instruments — revolving credit facilities, term loans, private notes and public bonds — and the Class B debt of about £1 billion under 12 instruments. The earliest Class A maturity was TWUL's US$285 million senior notes due on 22 March 2025, with £209 million plus £15 million of interest payable on 24 March 2025; seven further notes or bonds totalling £3,552 million fell due between 19 June 2025 and 18 April 2027 and the rest between 2027 and 2062. The first-ranking liquidity facilities, all issued on 18 July 2006 and undrawn, were a Class A debt service reserve facility of £253,264,273.13, a Class B debt service reserve facility of £44,156,641.51 and an operating and maintenance reserve facility of £252,821,993.05, all due to mature on 6 August 2025. ⁵

analysisThames Water Utilities Finance plc was set up as a financing company for its parent TWUL: it raises secured bonds, loans and private placements, guaranteed by TWUHL and TWUL, and lends the proceeds to TWUL, recharging interest and debt costs with a margin of 0.10%. TWUL's 2024/25 annual report says TWUL does not issue bonds directly to the public markets. TWUL owed TWUF £13,796.8 million under these intercompany agreements at 31 March 2025 (2024: £13,981.3 million); in January 2024 it repurchased £185.5 million of a £500.0 million intercompany loan due in 2025 at a £7.0 million discount. TWUF was the issuer of bonds carried at £11,237.6 million at 31 March 2023 (2022: £9,817.2 million), mostly Class A, and the group's borrowings at 31 March 2025 included £11,103.9 million of bonds listed under TWUF. The Global Legal Entity Identifier Foundation (GLEIF) records TWUF (02403744, formerly Thames Water Utilities Finance Limited, legal entity identifier 213800ESMPQ4RQ7G8351) as active at Clearwater Court, Reading. ^{1 2 3 4 5}

analysisTWUL also borrows directly: Kemble Water Holdings' 2022/23 accounts list £3,259.7 million of secured bank loans and private placements owed by TWUL at 31 March 2023, including index-linked loans, Class B loans and US dollar and sterling private placements such as $285.0m 3.570% notes due 2025, and the 2025/26 group accounts list TWUL's £725.0m Class A floating rate loan due 2026 at 31 March 2025. The restructuring plan documents name Thames Water Utilities Cayman Finance Limited, incorporated in the Cayman Islands, as issuer of some Class A guaranteed bonds, such as the £250,000,000 2.625% bonds due 24 January 2032 (ISIN XS1555168365) guaranteed by TWUHL, TWUL and TWUF on 24 January 2017, and list US dollar senior notes issued directly by TWUL, including the US$285,000,000 3.57% series 5 notes due 22 March 2025. ^{3 4 6}

analysisIn TWUL's own accounts, TWUF owed TWUL £200.0 million and £100.0 million under two unsecured intercompany loans at the London Interbank Offered Rate (LIBOR) plus 2% and plus 1.55% (accrued at the Sterling Overnight Index Average, SONIA, plus the margin after the LIBOR transition); on 25 February 2025 the £100.0 million loan stopped being repayable on demand for the stable platform period. Because the expected haircut in a court-led restructuring would cut the margin TWUF earns on the back-to-back debts TWUL owes it, TWUL recognised an impairment of £177.5 million on its investment in TWUF in 2024/25. ²

analysisAt 31 March 2021 TWUF held £11,237.9 million of non-current and £1,174.7 million of current intercompany loans receivable and owed £11,000.0 million of non-current and £1,040.7 million of current borrowings; after a pre-tax loss of £110.5 million, mainly £162.7 million of net losses on financial instruments, it had net liabilities of £10.1 million. Its interest income on intercompany loans was £376.1 million in 2020/21, and it had a £1,646.3 million revolving credit facility, £1,432.0 million of it undrawn, and £550.0 million of liquidity facilities usable only in limited circumstances. During the year it lent £1,575.3 million to group companies and was repaid £1,830.4 million, raised £1,574.3 million of new loans and repaid £1,830.0 million, received £405.9 million of interest and paid £347.6 million. It paid no dividends in 2020/21 or 2019/20, and its auditor PricewaterhouseCoopers LLP was paid £147,250 for 2020/21 (£94,000 for the statutory audit), borne by Thames Water Limited. ¹

analysisOn a post-swap basis the securitisation group's guaranteed debt was £12,933.4 million at 31 March 2021, £16.4 billion at 31 March 2023, £17.9 billion at 31 March 2025 and £18,202.6 million at 31 March 2026, according to the accounts of TWUF, Kemble Water Holdings, TWUL and TWUHL in turn; TWSSI's guaranteed debt was nil at 31 March 2025 and £1,836.5 million a year later. TWUHL's consolidated borrowings at 31 March 2025 were £5,548.0 million of secured bank loans and private placements, £11,103.9 million of bonds and £2,282.2 million owed to group undertakings, with £324.1 million of interest payable on borrowings and £1,356.2 million on group loans, £20,614.4 million in all; at 31 March 2026 the total was £22,836.4 million, including £2,282.2 million of principal and £1,572.2 million of interest owed within the wider group. Those intra-group amounts are TWUHL's loans from its parent Thames Water Limited, not debt of TWUL; the operating group's own borrowings are the loans, private placements and bonds. ^{1 2 3 4}

analysisTWUL's interim balance sheet at 30 September 2025 shows the borrowings of its group (TWUL, TWUF and TWSSI) as £18,182.1 million non-current (31 March 2025: £16,651.9 million) and £257.8 million current (£324.1 million), with £1,589.6 million of non-current derivative liabilities; its bonds were carried at £12,546.7 million against a fair value of £9,122.7 million, and its secured bank loans and private placements at £5,635.4 million against £3,525.0 million. The TWUL group paid £601.0 million of interest in 2024/25 (2024: £492.2 million), including £187.1 million capitalised; the TWUHL group paid £809.6 million in 2025/26, including £200.8 million capitalised, with new loans shown net of £111.5 million of fees. ^{5 3 4}

analysisAt 30 September 2025 TWSSI had £1,426.5 million of gross super senior debt, guaranteed by TWUL and TWUHL, and TWUL owed TWSSI £872.0 million under its intercompany loan, guaranteed by TWUHL and TWUF. Thames Water Super Senior Holdco Limited (16110214), which held TWSSI from 29 November 2024 until TWUL became its controller on 25 February 2025, is controlled by CSC Corporate Services (UK) Limited, notified on 29 November 2024; its officers, all appointed that day, are CSC Corporate Services (UK) Limited as secretary, the corporate directors CSC Directors (No.1) Limited and CSC Directors (No.2) Limited and one individual director, and CSC Capital Markets UK Limited controls CSC Corporate Services and CSC Directors (No.1). No Thames Water or Kemble company or officer appears among the holding company's controllers or officers. ^{5 6 7 8 9}

analysisTWUF's 2020/21 accounts put the securitisation group's gearing at 83.2% (2020: 82.3%), comparing covenant net debt of £12,497.1 million with TWUL's regulatory capital value of £15,025.3 million; senior gearing above 85.0%, Class A gearing above 75% or interest cover below 1.1x (senior) or 1.3x (Class A) would trigger conditions including a restriction on distributions from TWUL. On 24 July 2024 Moody's cut TWUL's corporate family rating to Ba2 from Baa3, and on 31 July 2024 S&P cut its Class A debt to BB from BBB-, both below the two investment-grade ratings Condition P26 of the licence requires. By 2025 the ratings had fallen to Caa3 (Moody's corporate family) and CCC (S&P Class A); at 30 September 2025 Moody's rated Class A Caa3, Class B C and the super senior debt B2 (first rated that month), and S&P rated Class A CCC and Class B CC. ^{1 2 3}

analysisUnder the court-sanctioned restructuring plan the group amended its swap agreements to add consent fees and further break clauses, with fees based on the market value of index-linked and interest-rate swaps on 15 January 2025 and each anniversary while the debt lacks two investment-grade ratings; the net derivative liability at 30 September 2025 was £1,349.9 million (31 March 2025: £1,418.2 million), of which £73.4 million related to the consent fee derivatives. TWUL's charges register shows eight charges, seven outstanding, among them a security agreement of 30 August 2007 in favour of Deutsche Trustee Company Limited as Security Trustee, with fixed and floating charges over the whole undertaking and assets; two charges of 25 February 2025 to Deutsche Trustee, one over specified intellectual property; and three to Kroll Trustee Services Limited, of 25 February 2025, 17 March 2026 (charge 023666610007, registered 18 March) and 9 September 2026 (023666610008, registered 15 September). The only satisfied charge is a legal charge of 28 September 1989 to Manor Farm Developments Limited over buildings at Manor Farm, satisfied on 19 June 1990. ^{3 4 5}

analysisThe most recent completed triennial valuation of the Thames Water Pension Scheme, as at 31 March 2022 and signed off in August 2024, showed a deficit of £444.7 million on assets of £1,639.2 million and liabilities of £2,083.9 million; the 31 March 2025 valuation was still under way in July 2026 and the Pensions Regulator had not opened an investigation. ⁶