David Bennett

Thames Water’s High-Stakes Bondholder Gamble

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Thames Water is privately owned by a consortium of institutional investors – primarily pension funds and sovereign wealth funds. About 80% is owned by

  • The Ontario Municipal Employees Retirement System, a Canadian pension fund that holds around 32% of Thames Water’s shares.
  • Universities Superannuation Scheme – a UK pension scheme for university staff that holds around 20% of Thames Water’s shares.
  • Infinity Investments, which is a subsidiary of the Abu Dhabi Investment Authority, that holds around 10% of Thames Water’s shares.
  • British Columbia Investment Management Corporation, a Canadian investment manager that holds around 9% of Thames Water’s shares.
  • China Investment Corporation, a sovereign wealth fund from China that holds around 9% of Thames Water’s shares.

There are also bond holders, who have lent money to the company. The publicly available information on Thames Water’s creditors is that its class A bondholders, hold about £12bn in debt and include Abrdn, Apollo Global Management, and Elliott Investment Management. Their status as class A debt holders comes from the terms of the £3bn loan approved by the Court on 17 February.

While Thames Water is privately owned, it is a regulated utility company with specific licensing requirements and a special administration regime in place. The Water Services Regulation Authority, or Ofwat, is the body responsible for the economic regulation of the privatised water and sewerage industry in England and Wales.

Ofwat grants Thames Water the legal right to operate, sets price limits, monitors performance to check whether Thames Water is meeting standards for water quality, customer service, and infrastructure. If Thames Water fails to meet these license requirements, Ofwat can take action, including fines or even revoking the license.

Beyond that, as a supplier of essential services, Thames Water is subject to what is called a Special Administration Regime. If the company is in serious trouble, the government can step in and appoint special administrators.

All of which raises the question of the possible consequences that the law allows if Ofwat was to revoke Thames Water’s licence and the government stepped in and appointed special administrators? Specifically, what rights if any would the investors and bondholders have?

First, Ofwat has never revoked a water company’s license. If it were to decide to do so it would have to cite repeated breaches of environmental regulations such as massive sewage spills. These have already occurred with record fines.

The £3 billion restructuring plan in the form of new bonds to that value gives the bondholders what is called super-senior status, but only applies to the new bonds approved by the High Court. The money comes in two tranches, half now and the rest through to 2026. The effect is to give liquidity to Thames Water, but a point will come when the bond holders will either be content to roll over their bonds or they will want their money.

So why did the bondholders agree to lend more money? Part of the reason is the whopping 9.75% interest rate on the bonds and the fact that they have a short maturity period of two and a half years.

So watch this space, or more particularly watch January 2027 when those bonds mature.

How could it play out? A lot depends on Thames Water’s environmental record going forward. With huge financial pressure the temptation to cut corners will be all the greater. And then there are still the bonds that were issued before the latest issue. Some of those will be coming up, I assume. And what of the investors? What of the Ontario Municipal Employees and what of the UK university staff who might want to have a say in whether the funds divest and whether they divest now or further down the line.

Runaway Problems Point To Solutions

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Runaway consumerism, pollution, and the human causes of climate change are problems that we humans seem inadequate to face and deal with.

We have this huge engine that we have made out of multiple pieces, and we don’t know how to apply the brakes.

Here’s a thought though. What if we stop seeing these as problems and instead see them as roads pointing to a solution even if the road is unclear?

The day I read that gross domestic product doesn’t mean how much we have produced, but how much we have spent on what we have produced I realised that the only meaningful engine in the economy is the consumer.

If we want to change society in the face of the climate crisis, we really have to stop consuming. We have to cut it by a huge amount, because if we don’t – well we know where that road leads.

But if we suddenly stop consuming overnight, the centripetal force would fling gobs and swathes of people off into space. It would be catastrophic.

Catastrophic of course for the companies that produce things, but also for everybody who would get caught up in it.

It would hit the people who would no longer have jobs. It would hit people who would no longer have access to all kinds of things. I mean you name it and it would cause problems if production didn’t exist.

Take something simple like water. How would people access it if nobody was making taps or washers or pipes any more.

So we can’t just stop consuming and say that that’s the solution.

But in the long term and even in the shorter term it has to be the solution and that is why we should all thank the climate crisis because it’s pointing exactly towards that.

And it’s pointing as exactly towards that at the same time is that we human beings with our desires and needs are getting slightly sick of this ever expanding drive and push to consume more.

We are growing out of consumerism and you can tell that is the case because people are pushing faster and faster for more and more distractions, and none of them are hitting the spot for very long.

So we are on a path that is narrowing from one direction and another, and we should be grateful because it’s pointing the way.

Trump’s Withdrawal From The Paris Agreement

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We’ve been here before.

President Trump announced the U.S. withdrawal from the Paris Agreement on June 1, 2017, citing mostly economic worries. The formal withdrawal process began in November 2019 and was completed in November 2020.

He argued that the agreement was disadvantageous to the United States and that it would harm American workers, businesses, and taxpayers.

He claimed the agreement imposed unfair economic burdens on the U.S. while allowing countries like China and India to continue increasing their emissions.

He argued that because of stringent emission reduction commitments, the U.S. would lose millions of jobs in manufacturing, coal, and natural gas.

He stated that the agreement gave other countries a competitive edge by placing stricter requirements on the U.S. while it was less demanding on developing countries, allowing them to grow their economies at a faster rate.

He cited estimates that the Paris Agreement would cost the U.S. $3 trillion in GDP and lead to the loss of 6.5 million industrial jobs by 2040.

He argued that adhering to the agreement would lead to higher energy costs for Americans.

He said that the agreement undermined U.S. sovereignty by allowing foreign entities to influence domestic energy policies.

He said it was not in America’s interests to allow international bodies judging the U.S. on whether it was meeting its commitments.

He argued that even if all countries met their targets, the agreement would have a minimal impact on reducing global temperatures and that the costs of compliance outweighed the potential benefits.

In 2021, after the 2020 election, President Biden signed the U.S. up to the Paris Agreement again and now in 2025 by executive order, President Trump has again withdrawn the U.S. from the Paris Agreement.

A pertinent question is to ask what has changed in India and China’s emissions policy and in their actual emissions between 2017 and today?

Both China and India have made changes in their emissions policies and actual greenhouse gas emissions since 2017..

In 2020, President Xi Jinping announced China’s aim to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060.

Despite policy commitments, China’s GHG emissions have continued to rise. In 2023, emissions increased by an estimated 3% to 14.9 gigatonnes of CO₂ equivalent (excluding land use, land-use change, and forestry), driven by increased coal and oil consumption following economic recovery from COVID19 policies and reduced hydropower production due to scarce rainfall that is very probably the result of the climate change.

India pledged to reduce the emissions intensity of its Gross Domestic Product (GDP) by 45% by 2030. India’s greenhouse gas emissions, however, have increased and in 2023, emissions increased by 6.1% compared to 2022, the largest relative increase among major emitters. The Climate Action Tracker estimates that India’s emissions will reach approximately 4 to 4.3 gigatonnes of CO₂ equivalent by 2030 under current policies.

So since 2017, both China and India increased emissions significantly. And if the argument was about economic advantage and disadvantage, the President Trump would be right. When the result of the inaction or counter-productive action by the U.S. is to hasten the destruction of the planet, then talk of which country is on top becomes laughably irrelevant.

The only justification for continuing on the present trajectory is to argue that science has the best chance of finding a way to combat climate change, and that means not strangling the very science that can result out of a healthy economy.

It’s worth repeating that President Biden argued that the U.S. had to continue with fossil fuels while working to wean the country of them, because otherwise the country would fail on its way to success. And no one in the mainstream gasped in horror at what he said.

The difference with President Trump’s executive order is that everyone believes that it tacitly includes a denial or at best a weak acknowledgment of the danger of climate change. And the knock-on effect of that will ripple around the world.

Al Jazeera

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Al Jazeera was established as an Arabic channel by the Government of Qatar in 1996 and started an English language channel in 2006. It headquarters are in Doha, Qatar.

The impetus for founding it was the closure of the BBC Arabic TV service because of its editorial conflict with its then Saudi partner.

As a side note, BBC Arabic TV is currently operational. The BBC ended its Arabic radio broadcasts in January 2023 to cut costs, but the television service continues to broadcast.

Al Jazeera became important because it could interview factions that others could not, such as the Taliban and Al-Qaida. That brought it into conflict with the US who saw it as having an anti-US bias. And the channel became internationally important with its broadcasts during the Arab Spring, covering protests and uprisings across the Middle East and North Africa.

The Gulf States, Saudi Arabia, UAE, Bahrain, and Egypt have all accused Qatar of sponsoring terrorism, and by extension the accusations cover Al Jazeera.

The Palestinian Authority closed Al Jazeera’s offices in the West Bank temporarily in 2009 after the network alleged that PA President Mahmoud Abbas and others planned to assassinate former Palestinian leader Yasser Arafat.

In the following years the PA has often accused Al Jazeera of being sympathetic to Hamas, the PA’s main political rival.

Then in December 2024, the PA began operations against Hamas and Palestinian Islamic Jihad militants in the Jenin refugee camp, trying to get back control in the West Bank. Al Jazeera reported on this and the PA accused it of disseminating misinformation. As a result, on January 1, 2025, the PA suspended of Al Jazeera’s operations in the West Bank.