Given that ratings agencies were brought up it's worth adding a bit more detail here.

Thames' debt is C-grade because it recently defaulted on its debt. How is that possible given that its debt servicing costs are not unusually high? Normally you'd expect interest costs to go up well before default. Well, on the surface level because it couldn't raise more money from investors to meet rising costs. It couldn't do that because Ofwat keep fining it for "underperformance" whilst also refusing to allow prices to catch up with where they used to be in the past. Investors refused to put more money in unless a 40% price rise was allowed by the government, but the government likes to boast it has forced prices 45% lower since the 1980s (in real terms). Government doesn't budge, investors go on strike = default = downgrade.

There was waste under state ownership but probably not half of every pound spent, which is what forcing prices to nearly halve would have required.

Under the Tories it seems to have been believed by investors that eventually Ofwat would be reigned in and the financial pressure on UK water companies would ease. That didn't happen, instead the Tories imploded and Labour won. Both ratings agencies say explicitly that this is the reason they consider Thames' outlook to be either stable (at best) or negative:

"We revised down our assessment of TWUL's business risk profile to satisfactory because we now consider that U.K. water companies will operate in a less supportive regulatory environment"

Less supportive regulatory environment is ratings-speak for "because we think the left will shaft Thames and its investors".

This outcome is the opposite of the fantasy being peddled in this thread where investors have been extracting great wealth from Britain. It's the opposite: investors are getting hosed by the government. They're literally losing the money they put into Thames Water because the government forced Thames to spend it all on making water artificially cheap in an unsustainable manner.

Again Thanks, extremely interesting insight.

I'm not sure they're entirely to blame although I'm sure they've played their part.

Look at the shareholding changes (2011-2017 Macquarie) and dividend payout percentage. It seems the current shareholders were left holding the bag, and perhaps we should be pointing fingers at Macquarie. When they left the debt had been increased by £2bln. If you look at their dividend payout ratio, in most of the years it held the investment, this ratio is extraordinarily high. Perhaps they sucked this dry, necessitating a price increase. (Current shareholders have barely paid anything).

Capital expenditure has been flat, only really increasing in 2021-2024. Perhaps chickens coming home to roost?