Which is why I think how it is handled is critical. The Pratley article and the one I linked aren’t that far apart - bondholders who don’t assess risk don’t deserve a bailout, but equally they have rights under the law that the UK ignores at peril. The equity recognized a while ago they have lost everything.
But it is important to note that it is not just Thames Water, but the entire water sector - and likely everything else in the circa 2000 privatisations.
Uk roads and highways faced a similar catastrophy back in the 1980’s and early 1990’s. It lead to the development of a code of practice for highway structures that advised owners on how to manage their asset stock. While its advice you’d have to really good reasons not to follow that CoP and budget constraints is not one of them.
Of course asset owners lent heavily on the private sector to deliver this and still do, but as I alluded to above its a license to print money as well. But there is a system in place and many if not the vast majority of asset owners know the condition of their bridge stock, where the critiical structures and issues are and the estimated budget needed to restore it.
To my knowledge no such system exists for the water industry but in my mind there is no reason why it shouldnt. The basic idea behind it is 100% sound. They are 100% reactive and while the risk to humans is small the environmental risk is huge. One could argue that they arent following environmental legislation and its not veing enforced either.
Psst Ben, they aren’t a political party.
On the water thing, I’ve just seen that bills will be going up but the extra is ring fenced for infrastructure improvements. Cash that isnt spent will be returned to customers. New powers for OFWAT too including prosecution for directors.
Take with a pinch of salt at this stage while i fact check it.
They feel like a governnent in a real hurry at the moment.
They don’t have a great deal of choice, and are serious enough people to have prepared immediate first steps. Thames Water has already defaulted on debt. I’d be curious to know what Kemble debt is trading at, but there is a good likelihood some has been snapped up by the same sort of entities that bought up distressed Greek debt, and will try to extract a premium from Labour’s reluctance to take a hard line on the bonds that would spook the broader market.
I would love it if they took a hard line on the bonds, because ultimately that’s the point of the market. You’re not guaranteed a return on your investments, and it’s frankly ridiculous to privatise the profits and socialise the debts.
Pity Labour seems to be taking the Ming vase approach into government.
Have @PeachesEnRegalia and Grimey ever been seen in the same place together??
https://x.com/GBNews23653867/status/1811467210528882807?t=OkCtiN7yn75hOz6g0Lb3eg&s=19
Labour is in a tough place because of the nature of the sector, simply leaving the process to normal administration/bankruptcy proceedings would produce that hard line for the bonds (i.e. they end up owning a company with a huge regulatory obligation and an even larger management challenge). But that isn’t particularly palatable.
I wouldn’t be too critical of Labour at this stage for taking a cautious approach. No one has really done a damn thing about this problem for over two years of what really has been a crisis, and Labour is putting it front and center within days of coming into office. They don’t benefit from taking a hard Bolshie line right from the start. The signal needed is a willingness to deal, but with a hard enough edge - so that bond holders have a secondary market to turn to, but are also driven to do so.
I don’t imagine it to be a particularly Bolshie line, considering it’s literally the basis of capitalism, if you take risks you may get rewarded, but you may also lose your money. That’s literally why the bonds are trading at a discount, isn’t it? To compensate for the risks.
Just letting it go into administration and keeping their hands off would be the easiest, but that is not really an option. There are also loads of people calling for the bondholders to be wiped out completely, by government diktat. That is the Bolshie line, and it really isn’t the basis of capitalism to say the government can decide to step in and take whatever residual value there is away because they don’t like you anymore.
The UK water sector is worth some number. That number isn’t enough for most of the equity holders to get anything, for Thames at least is very unlikely to be enough for bond holders to get everything owed. The bonds are trading at a discount because the market knows that, but that isn’t the same proposition as dispossession - which is what many are pressuring Labour to do.
https://x.com/guardian/status/1811036792642015395?t=T6oSSMopcxIkAsx2-XJyBA&s=09
There is something wrong with the UK media and some people who seriously think that the public will be interested in this tv show with this 18th century twerp.
I find it rather distasteful that Rees Mogg has constantly used his children as part of his ridiculous “brand”. Most politicians go out of their way to keep their children out of the limelight, and it is one thing that the UK media rightly abides by.
Happy St Crispin’s Day to you, too.
I haven’t read the article yet, and I have great respect for Jonathan Freedland. But, if Southgate is the bar for COMPETENCE, then UK is screwed.
You just got to love those names though
Peter Theodore Alphege Rees-Mogg
Mary Anne Charlotte Emma Rees-Mogg
Thomas Wentworth Somerset Dunstan Rees-Mogg
Anselm Charles Fitzwilliam Rees-Mogg
Alfred Wulfric Leyson Pius Rees-Mogg
Sixtus Dominic Boniface Christopher Rees-Mogg
To go through life with the name Sixtus…because you were err…number 6.
Beats being named after cheese…in school I met a family with daughters named Swiss, Cheddar, and Camembert and a boy named Roquefort. Stiff upper lip should come naturally to Sixtus anyway…
Maybe Sixtus might be known as Dom or Chris?
The Rees-Mogg documentary won’t make it to these shores, but strangely, I am interested in watching it, at least for a few minutes to see what it’s like.
Not a single mention of a pot noodle. It’s a no from me.
I think that was the name of the 6th son in Neil Gaiman’s Stardust. In the book, the sons all end up murdering each other.