European Utilities: The Metering Check: June 2026

Research evidence excerpt

European Utilities: The Metering Check: June 2026

Focus on UK water sector: Selective value

Concerns over nationalisation and increased public control drove under performance /

softness across the UK water credit universe (Exhibit 1). We view this as an opportunity

to selectively add exposure, as nationalisation risk appears most acute for Thames Water

that faces liquidity pressure (existing super senior funding lasting potentially for a few

more months) and the company is working with its creditor group and Ofwat on an

equity solution.

Beyond Thames Water, most companies have successfully raised new equity or attracted

new shareholders, including Southern Water, Anglian Water, Yorkshire Water and United

Utilities. We think the recent sector weakness presents a good opportunity for investors

willing to look through the near-term political noise. Southern Water and Anglian Water

Osprey bonds warrant particular focus, given their significant underperformance relative

to peers.

Exhibit 1: Performance of UK Water bonds has been soft following concerns of nationalisation and increased public control

Average z-spread (bps) by water company. We note that the performance has been poor in weakly positioned water companies like Southern Water and Anglian

Water Osprey (OSPRAQ).

SVTLN UU GLCCUK NWGLN YTLPMK

OSPRAQ KEL SWSFIN SWSFIN (Guarantee) AWLN

Nationalisation / increased

public contol concerns

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Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26

Source: BofA Global Research. AWLN = Anglian Water, OSPRAQ = Anglian Water Osprey Financing, GLCCUK = DWR Cymru (Welsh Water), KEL = Yorkshire Water, NWGLN = Northumbrian Water, SVTLN = Severn Trent,

SWSFIN = Southern Water, UU = United Utilities, YTLPMK = Wessex Water.

BofA GLOBAL RESEARCH