Severn Trent PLC yesterday published a prospectus relating to a €6,000,000,000 Euro Medium Term Note Programme of Severn Trent Plc and Severn Trent Utilities Finance Plc as issuers and Severn Trent Water Ltd as guarantor of notes issued under the programme by Severn Trent Utilities Finance Plc.

Outlining related risk factors for potential investors, the prospectus says that future UK political developments, including the referendum , could affect the fiscal, monetary and regulatory landscape to which the Group is subject and also therefore “the Issuers' and the Guarantor's ability to fulfil their obligations under the Notes.”

Under the Programme Severn Trent Plc and Severn Trent Utilities Finance Plc (STUF) may from time to time issue notes denominated in any currency agreed between the Issuer and the relevant Dealer .

The prospectus says payments of all amounts payable in respect of Notes issued by STUF will be “unconditionally and irrevocably guaranteed by Severn Trent Water Ltd as the Guarantor. The prospectus has been approved by the United Kingdom Financial Conduct Authority – described as the UK Listing Authority.

Application has been made to the UK Listing Authority for Notes issued under the Programme during the period of 12 months from the date of the Prospectus to be admitted to the official list of the UK Listing Authority and to the London Stock Exchange plc for the Notes to be admitted to trading on the London Stock Exchange's regulated market.

The Programme has been rated: Baa1 (in respect of Notes issued by Severn Trent) and A3 (in respect of Notes issued by STUF) by Moody's Investors Service Ltd and BBB- (in respect of Notes issued by Severn Trent) and BBB+ (in respect of Notes issued by STUF) by Standard & Poor's Credit Market Services Europe Ltd.

Notes issued under the Programme will have a minimum denomination of €100,000 (or its equivalent in any other currency as at the date of the issue of the relevant Notes).

The prospectus points out that the Notes may not be a suitable investment for all investors and that each potential investor in the Notes must determine the suitability of the investment in light of its own circumstances.

The prospectus has flagged up a number of risk factors, saying that “…the Issuers and the Guarantor believe that the following factors may affect their ability to fulfil their respective obligations under the Notes issued under the Programme and the Guarantee…... Most of these factors are contingencies which may or may not occur and the Issuers and the Guarantor are not in a position to express a view on the likelihood of any such contingency occurring. “

However, the prospectus also points that while the factors described represent the principal risks inherent in investing in the Notes issued under the Programme, the inability of the Issuers and the Guarantor to pay interest, principal or other amounts on or in connection with any Notes “may occur for other reasons and the Issuers and the Guarantor do not represent that the statements …regarding the risks of holding any Notes are exhaustive.”

“Any significant change in UK government policies or political structure could have an impact on the Group's business"

Commenting on risk factors relating to the legal, regulatory and political environment, the prospectus states:

“Any significant change in UK government policies or political structure could have an impact on the Group's business. In particular, the UK government has announced that a referendum will be held on 23 June 2016 to determine whether the UK should remain a member of the European Union. Future UK political developments, including but not limited to the referendum and/or any changes in government structure and policies, could affect the fiscal, monetary and regulatory landscape to which the Group is subject and also therefore the Issuers' and the Guarantor's ability to fulfil their obligations under the Notes.”

On environmental and public health regulation, the prospectus says:

“The water and wastewater industry in the United Kingdom is subject to substantial domestic and EU regulation, placing significant statutory obligations on STWL with regard to, amongst other factors, the quality of treated water supplied, wastewater treatment and the effects of STWL's activities on the environment, biodiversity and human health and safety. The ongoing development of such regulation could lead to additional obligations and restrictions being imposed on STWL which may adversely impact its operations and increase operating costs and/or capital expenditure.”

Ratings agencies Standard & Poor's and Moody's Investors Service both view Brexit as credit negative for the UK– according to a report in the Financial Times, Standard & Poor's says the UK is likely to lose its AAA credit rating.

The UK's decision to leave the European Union will lead to a prolonged period of uncertainty that will weigh on the country's economic and financial performance and will be credit negative for the UK sovereign and and other UK debt issuers, Moody's Investors Service said in a report published today.

Click here to read the Prospectus in full