Thames Water - comment

The press has launched a river of articles on the Utility over the Easter weekend, spreading more confusion than facts. The discussion at the moment is - for now - confined to the Kemble Level and an insolvency or trigger at Kemble does not per se x-default into the WBS. A&M, on behalf of Kemble, have engaged with bondholders for a D/E swap. But the difficulty is of course to find any valuation on which to have these negotiations (never mind a new £3bn commitment) without an AMP8 plan to back it up. We expect the newsflow to intensify this month before Lloyds amend and extend - for a brief period only - to keep TW on a short leash. We sold our Bs last week (see previous comment).