Thames Water parent ‘owes two Chinese state-owned banks’ as debt downgraded – business live

From 2h ago 06.55 EDT Thames Water reportedly owes Chinese banks as Fitch downgrades rating Another update on Thames Water’s lenders: two Chinese state-owned banks are among the companies that are owed £190m by the UK’s biggest water company, the Financial Times has reported. The FT reported that Chinese state-owned Bank of China, and Industrial and Commercial Bank of China (ICBC) were lenders, as well as Allied Irish Banks and Dutch lender ING, citing people familiar with the matter. The debts mean that the two Chinese state-owned companies could end up as shareholders of Thames Water if its parent company is unable to repay the loan. Fitch Ratings, an influential debt rating agency, on Thursday said it had downgraded the debt of Thames Water’s parent company. Fitch wrote that even if the lenders do agree to extend Kemble Water Finance Limited’s debts, it would probably still constitute a default. What happens after that would depend on the terms of the debt – and what security the lenders demanded in exchange for the money. Fitch said: With Kemble’s shareholders not injecting the £500m of equity into Thames Water Utilities Limited expected for end-March 2024, and Kemble considering it not possible currently to fulfil upcoming interest payments, we believe that a downgrade to [restricted default] has become highly likely. Even assuming that lenders will agree to amend and extend the £190m loan due on 30 April 2024, this agreement would probably constitute a distressed debt exchange under our criteria. Share2m ago 08.58 EDT Phillip Inman The Bank of England’s decisioon maker panel (DMP) survey of about 2,500 businesses from all parts of the economy has eased pressure to keep interest rates high after it found that that firms are finding it easier to recruit staff, wages growth has fallen, and inflation expectations are lower. Firms reported that prices charged to customers rose by an average annual rate of 5.3% in the three months to March, down

from 5.4% in the three months to February. The BoE said businesses expect this still high level of output price inflation to decline over the next year. Year-ahead own-price inflation was expected to be 4.1% in the three months to March, down from 4.3% in the three months to February. The BoE said: Output price inflation is, therefore, expected to decline by 1.2 percentage points over the next 12 months based on three-month averages. Expectations of where wages growth will be over the next three months fell to 4.9% – the lowest since June 2022. The single-month figure at 4.7% was lowest sinc

e May 2022. Illustrating how the demand for staff has eased, firms reported annual employment growth of 2.0% in the three months to March, lower than the 2.3% in February. Looking ahead for a full year, firms said employment growth would be 1.4%. The DMP came to prominence last year when members of the BoE’s interest rate setting body – the monetary policy committee (MPC) – cited how firms expected to keep prices elevated, despite forecasts that it would fall steeply across the economy. External MPC member Catherine Mann said responses showing that many firms intended to increase their margins in 2024 showed that the inflation genie was far from being put back in its bottle. Rob Wood, chief UK economist at Pantheon Macroeconomics, a consultancy, said: The MPC will take further confidence from the falls in wage growth and price expectations in March’s Decision Maker Panel. It’s still quite a long path back to target consistent services inflation, so rate cuts are likely to be gradual. Share5m ago 08.55 EDT The number of Americans claiming unemployment benefits increased by more than expected last week, as the US Federal Reserve decides when to cut interest rates. Initial jobless claims rose to a seasonally adjusted 221,000 for the week ending on 30 March, according to government figures. A Reuters poll of economists showed an average forecast of 214,000 claims. Reuters reported: Labour market resilience is anchoring the economy, with gross domestic product increasing at a brisk 3.4% annualized rate in the fourth quarter. Growth estimates for the first quarter are as high as a 2.8% pace. That strength, combined with still-high inflation, could see the Federal Reserve delaying a much-anticipated interest rate cut this year. Federal Reserve chair Jerome Powell on Wednesday made comments described by some economists as “dovish” – in line with cutting interest rates to support the economy. Powell said that recent data on job gains and inflation have come in stronger than expected, but this data “does not materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labour market and inflation moving down toward 2% on a sometime bumpy path”. Lee Hardman, a senior currency analyst at MUFG, a Japanese bank, said: The comments provide further reassurance to market participants that the Fed remains on c