Client stories

Investors welcome Thames Water’s return to the EUR market

Delivering essential services while protecting the environment and making a difference in the community

Thames Water Utilities Ltd is the UK’s largest water and wastewater services provider, serving a population of 15 million across London, Thames Valley and the surrounding areas. Managing 97 water treatment works and 354 sewage treatment works, Thames Water provides around 2.6 billion litres of clean drinking water, and treats up to 4.7 billion litres of wastewater, every day.

To incorporate the work Thames Water is doing to create long-term value for society and local communities, alongside its objectives for environmental protection, the company launched a new Sustainable Financing Framework last year, which replaces its Green Bond framework. DNV Business Assurance Services UK provided an independent assessment of the framework, confirming that it aligns with the International Capital Market Association’s Green Bond Principles 2021, Social Bond Principles 2021, Sustainability Bond Guidelines 2021, and the Loan Market Association’s Green Loan Principles 2021 and Social Loan Principles 2021.

Strong investor support allows Thames Water to upsize dual green tranche

Supporting Thames Water in December last year to present its new Sustainable Financing Framework and broader ESG strategy to investors in a non-deal roadshow, the utility provider mandated NatWest to advise in the role of Joint Lead Manager for a green EUR issuance under the new framework.

To prepare for Thames Water’s debut green visit to the EUR market, as one of the Joint Lead Managers, NatWest arranged a deal specific roadshow and several meetings, engaging with over 100 investors. Based on their feedback, Thames announced a EUR green dual tranche 6-year and 10-year transaction, with an expected size of €500 million per tranche.

Investors showed strong appetite when order books opened, allowing the issuer to adjust the pricing at the tighter end of guidance as well as upsize the transaction to €575 million per tranche.

Thames Water, which is the first UK Water Utility to access the EUR market with a public benchmark transaction since 2010, will use the proceeds of the green bonds for eligible projects outlined in its framework. Green project categories include: “Sustainable Water and Wastewater Management”, “Renewable Energy”, “Energy Efficiency”, “Pollution Prevention and Control”, “Sustainable Management of Natural Resources”, “Terrestrial and Aquatic Conservation”, “Clean Transportation”, and “Climate Change Adaptation”. 

Green bonds help Thames Water diversify its funding sources

Peter Dooley, Head of UK Energy and Utilities, NatWest, commented: “We congratulate our customer on their strong return to the EUR market, achieving a good size for this dual tranche green bond while also attracting a diverse investor base. This successful transaction positions Thames Water well for future visits to this market.”

Alastair Cochran, CFO, Thames Water, said: “On behalf of the team at Thames Water, I wanted to reach out to thank NatWest as one of our Joint Lead Managers on the dual tranche Euro issue, utilising our updated Sustainable Financing Framework. Our purpose is to deliver life’s essential service, so that our customers, communities and the environment can thrive. Our approach to sustainability runs through everything we do, from the way we invest in infrastructure and run our finances, to the way we serve our customers and look after the natural environment.

In addition to being our first green bond in the Euro market, the transaction also delivered on one of our key financing objectives which is to diversify our sources of funding, as evidenced by a book that was overwhelmingly dominated by new investors. So, thank you for your support, advice and delivering a successful outcome.“

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