Thames Water Torture Will Drip on for Months

The future of Britain’s biggest water and sewage utility is about as clear as a glass of sludge from London’s storied river. Markets increasingly suggest that Thames Water Utilities Ltd. is heading toward some kind of restructuring of its £16.5 billion ($21 billion) debt. But you wouldn’t know that from the way both the company and its regulator are talking.

Thames is the bête noire of an unloved industry, the worst performer among a group that has provoked public outrage by spilling billions of liters of effluent into rivers every year while under-investing in sewer networks and paying generous rewards to executives and shareholders. To this charge sheet, we may within months be able to add a default and major debt workout that risks wide-ranging ramifications for the cost of capital for utilities and Britain’s ability to attract investment in infrastructure.