UTILITIES
- While Thames Water may no longer be in scope for IG benchmark investors, its shadow still looms large over UK water. DWR Cymru and Anglian Water were the latest to print deals with double digit NICs. Yorkshire Water has mandated for next week. We assume these issuers are keen to get funding done ahead of the final Ofwat determination in December, which could be the last step before SAR for Thames Water with volatility likely.
- THAMES bonds were pressured this week following last week’s disappointing response to Ofwat’s draft determination. The proposed Water (Special Measures) Bill brought further intrigue before news of a creditor rescue plan triggered a turnaround.
- Local reports suggested Italgas may make a binding offer for 2i Rete Gas next week, inline with previously reported timelines.
- Veolia and Gas Networks Ireland were active in Euro primary. While Veolia printed 10bp through our FV calculations, Gas Networks Ireland brought a more generous 10bp NIC, albeit rather subjective, with the tender helping secondary.
Little to report in secondary spreads; Drax, like other crossover names, saw its spread widen partly due to the rates rally.
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