Hedge funds are betting against listed British utilities after a liquidity crisis at Thames Water highlighted rising debt levels across the industry.
New York company Millennium has taken a short position on supplier United Utilities, accused of dumping wastewater in the Lake District.
While Boston-based Arrowstreet has revealed a short position in Pennon Group, owner of South West Water and Bristol Water.
Meanwhile, the debt of Southern Water and Yorkshire Water has also come under attack, according to a Bloomberg report. It comes as Thames Water struggles to finalize a new rescue plan.
Britain’s biggest water company, which supplies millions of homes in London and the south-east, will publish a five-year spending plan tomorrow.
Sewage scandal: Comedian Steve Coogan (pictured), creator of Alan Partridge, joined protesters outside the United Utilities offices in the Lake District this week.
Plans could include taking on additional debt, according to reports.
The company, which is already £18bn in debt, fell into crisis this month when shareholders refused to hand over £500m amid a dispute with regulator Ofwat.
Thames wanted to increase customer bills by 40 per cent to fund an £18.7bn investment plan, but Ofwat blocked the increase.
Taxpayers could foot the bill if the Government is forced to bail out Thames, which faces administration if it cannot raise fresh funds by the end of next year.
Parent company Kemble has defaulted on a £400m loan and warned it will miss repayment deadline on another £190m loan this month.
Elsewhere, United Utilities is embroiled in a scandal after being accused of dumping wastewater into Lake Windermere. Activists say the beauty spot’s water has turned green with “toxic” levels of algae.
Comedian Steve Coogan, creator of Alan Partridge, joined protesters outside his Lake District offices this week.
Activists have criticized the company’s decision to pay record dividends.
United said it “shares concerns” about “overflow operations and the impact on local waterways.” “We are already investing to address this problem.”
United was the worst water company for wastewater spills last year, in part because of its high number of storm drains, totaling 97,537 last year.
The spills lasted a total of 650,014 hours, compared to 425,491 the previous year.