United Utilities Water sells £50m of 43 year index-linked notes

05 May 2006

United Utilities Water PLC (A2, stable; A-, stable) has agreed to sell GBP 50m of 43 year index-linked notes to Barclays Bank PLC via the group's London listed E5bn medium term note programme.

This is UUW's longest bond issue to date and extends the group's debt maturity profile to 2049.  The spread that UUW will pay above the risk free rate (the yield on UK Government bonds with an equivalent maturity) to compensate investors for taking its credit risk for the next 43 years is the tightest credit spread the group has paid on any bond issue, in any market, in any maturity, and in any currency to date. 

The bonds were priced at an all-in real yield of 1.777% (reflecting a yield of 1.287% on the underlying government bond).  The bonds will carry a fixed annual coupon of 1.7937% on the inflation adjusted principal.

The transaction will close and the proceeds will be received on 19 May 2006. 

This latest transaction for UUW brings to a total of £600m, the volume of index-linked securities the group has sold or agreed to sell since the beginning of October 2006.