Dominic Frederico, CEO of US insurer Assured Guaranty, expressed confidence that the firm will not incur losses related to Thames Water, a company facing significant financial difficulties. Assured Guaranty holds a $2.4 billion (£1.8 billion) stake in Thames Water’s bonds and claims it is protected by a robust legal structure.
Frederico suggested that the UK government is unlikely to impose losses on creditors, comparing the situation to Puerto Rico, which maintained payments on its water company debt even during a severe debt crisis. He stated that he believes the UK government will similarly protect financial stakeholders.
Thames Water’s debt amounts to £17.7 billion, with creditors currently in effective control of the company after shareholders exited last year. These creditors have put forward a proposal for a £5.3 billion capital injection to take over and restructure the water utility, although they are seeking leniency on pollution fines from Ofwat, the water regulator for England and Wales, to make recovery feasible.
The proposal has drawn criticism, with Environment Secretary Steve Reed insisting that Thames Water must uphold the same environmental standards as its competitors. Some have suggested that the government should consider placing Thames Water into special administration, a move that could lead to significant losses for creditors.
Despite the controversies, Assured Guaranty maintains that it expects Thames Water to avoid government control and that the creditor plan will receive approval. The company’s exposure to UK water entities has reportedly increased to over $16 billion as of June, from $10.6 billion in March 2022. The company’s CFO has previously stated that the UK government is unlikely to pursue nationalization due to budget constraints.
Some experts caution that the creditor’s proposed plan may not adequately resolve Thames Water’s long-term challenges. A spokesperson for Thames Water argued that special administration would hinder necessary improvements and operational turnaround. Assured Guaranty and the group of senior creditors were contacted for further comments.
Source: https://www.theguardian.com/business/2025/aug/19/thames-water-creditor-compares-uk-to-puerto-rico-over-treatment-of-lenders