Bank of Montreal said to sell Thames Water debt at 30% discount
Bank of Montreal has sold about £300 million (US$381 million) of Thames Water’s senior debt at an almost 30 per cent discount, according to people familiar with the transaction.
The Canadian lender sold a mix of the utility firm’s senior debt, including bilateral loans and privately placed debt, split across Class A instruments with different maturities, said the people, asking not to be identified discussing private information.
The debt was sold for a little over 70 per cent of its face value, following an auction process with a reserve price of 65 per cent, which closed on Friday, according to a memo seen by Bloomberg News. Representatives for BMO did not respond to requests for comment. A spokesperson for Thames Water declined to comment.
Several dealers had been marketing the debt in recent weeks, with some creditors increasingly anxious to reduce exposure to the troubled utility company. The U.K.’s water regulator said last month that it wants to put the firm into special measures, while Moody’s Ratings downgraded its highest-ranked bonds to junk.
Single trading desks sold hundreds of millions of pounds of Thames Water bonds over just a couple of days following the rating action, while £300 million of Class B private debt also changed hands at the end of July, Bloomberg previously reported.
Still, there are opportunistic investors looking to buy the debt relatively cheaply in the hopes of making big returns. And if they build big enough positions, they could get a seat at the table during key talks over the future of the business.
The utility is now in formal talks with creditors about options to restructure its debt load. A group including BlackRock Inc. and Elliott Investment Management LP have formed a
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