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Our views 24 July 2019

Nationalisation: navigating political risk in the utility sector

By Matthew Franklin, Senior Credit Analyst

5 min read

Once again political risk is on the rise in the UK. With Boris Johnson becoming Prime Minister and facing the same Brexit impasse that defeated Theresa May, attention once again has begun to turn to what a Labour government could mean for investors.

One particular focus for bondholders is the Opposition’s commitment to nationalise large parts of the utilities industry – the regulated electricity, gas and water networks. Labour has in recent weeks restated its nationalisation position, perhaps anticipating a general election sooner than the May 2022 date prescribed by the Fixed-term Parliaments Act 2011. But what could nationalisation mean for lenders? And should bondholders fear it?

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