Sutton & East Surrey has become the first UK water company to sell bonds wrapped by a monoline financial guaranty insurer in a corporate finance deal with asset-backed features.

The company sold £100m (€158.7m) of sterling-denominated bonds, which were index-linked to match the borrower's cashflows, on Tuesday. The notes are guaranteed by Financial Services Authority, resulting in a triple-A rating. The structure, which included a comprehensive investor protection package similar to many securitisations, allowed Sutton & East Surrey to significantly increase its gearing at an attractive cost compared to other forms of financing. The bond issue proceeds will be used to refinance existing debt. The deal was arranged and managed by Royal Bank of Scotland.