UTILITIES
Funding the green transition remains topical in the UK. It was reported by Bloomberg this week that EDF is looking to create an equity instrument to attract investors for Hinkley Point. Should they pursue a whole business securitisation model, debt could be raised outside of EDF which already has extensive domestic funding needs. Iberdrola announced plans to double its investments through ScottishPower to £24bn.
- Spreads were firm, outperforming slightly with no curves wider on the week.
- The acquisition of 2i Rete Gas by Italgas was confirmed. The enlarged group is a positive, while it plans to reverse the increased leverage over the next 3 years. Moody’s and Fitch affirmed, although Fitch sees post-merger targets as ambitious. S&P put 2i Rete Gas on watch positive with an upgrade is expected post-closing. It does not rate Italgas.
- Thames Water was fined by Ofwat for environmental and efficiency shortfalls, while reported restructuring negotiations continue. It also rolled over a Class A RCF, buying some liquidity runway. Bonds were slightly lower on the week.
- Southern Gas Networks brought a debut Euro issue. As we expected, investors needed a concession on that. We profiled the credit for those unfamiliar with the name.
Eurogrid was also in the market with a dual tranche priced close to its curve.
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