Not-for-profit Welsh Water(Dwr Cymru) has raised £600m through a new bond issue that will help finance its capital investment programme.
Its first bond issue for three years, and of the largest in the 海角视频 bond market this year, carries a fixed interest rate for bond holders of 5.75% - which is only 0.138% above the 海角视频 Government’s benchmark gilt rate. The sustainability bond has a 20-year term.
Welsh Water’s net debt - both bonds and other borrowings - amounts to £4.3bn. Its bonds account for £3.3bn of the total. Its gearing against its capital value of £7.5bn, has been reducing in recent years and now stands at 60% compared to 93% back in 2021. The company has one of the lowest debt to regulatory asset value levels of any 海角视频 water company.
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As well as being used to finance the company’s investment plans for its next five year regulatory period, the proceeds from the bond issue will also be utilised to refinance existing debt.
For 2025-2030 the company said it has put forward a record investment package of £4bn, with £2.5bn to improve the environment.
Mike Davis, Welsh Water’s chief financial officer said: “After a three year absence from the market, this bond issue confirms Welsh Water’s position as a premier credit in the water sector. It is great to see such a strong interest from investors in the company during what is a challenging time for the 海角视频 water industry.
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“We have ambitious plans for the next five years to invest a record £4bn to improve our services and protect the environment.
“The money raised will be a key part of our plans for the future, so that we can deliver high quality services for our customers through continuous improvements.”
Welsh Water’s index linked bonds and debt are linked to the retail prices index measure of inflation. With inflationary pressures over the last few years that did see its exposure rise to a high of around 13.5% last spring, but has since fallen back sharply as inflationary pressures have eased - although Welsh Water does deploy hedging through swaps.
Welsh Water serves three million people across most of Wales, as well as having customers in Herefordshire. Its activities have an annual £1bn impact on the Welsh economy. It directly employs almost 4,000 and supports a further 5,000 jobs through suppliers and contractors.