Canada’s state-backed export agency has suffered losses after lending hundreds of millions of pounds to Thames Water, in the latest ripple effect from the financial crisis at Britain’s largest water supplier.

Export Development Canada initially lent to Thames in 2018 to facilitate an investment in the utility by the Ontario Municipal Employees Retirement System, the pension fund that wrote down the value of its 31.8 per cent stake to zero in May.

EDC recently sold loans it made to Thames Water at steep discounts, according to the Financial Times, citing investors. Its website shows it provided financing of C$100 million and C$250 million to Thames Water Utilities Limited, a subsidiary, in March 2018, followed by C$250 million to C$500 million in the following March, as “support for Canadian direct investment abroad”. Canadian funds are among the largest investors in Thames Water, with British Columbia Investment Management Corporation owning 8.7 per cent of the business.

The financial crisis at Thames Water has been mounting for two years as it is weighed down by debts of about £16.5 billion and higher interest rates. Shareholders, led by Omers, had pledged to inject up to £3.5 billion of new equity, but in March they declared the company to be “uninvestable”. Omers has made “a full writedown” of the holding, which three years ago it valued at almost £1 billion.

Thames has warned that it has only enough money to continue trading until next May, but it is struggling to secure emergency investment to avoid insolvency. Its credit rating was downgraded by Moody’s and S&P, the leading rating agencies, last month, putting it in breach of its operating licence.

Ofwat, the water industry regulator, has moved to put the company into special measures with a “turnaround oversight regime” and has cut Thames’ demand for a 44 per cent rise in customer bills in half.

Jonathan Reynolds, the business and trade secretary, said in June, before the general election, that a Labour government would be opposed to renationalising Thames Water, saying that “people should not expect the state to bail out bad investments”.

EDC, which since 1944 has been helping Canadian companies to trade overseas, said that it would not comment on any specific debt disposals. “We have been carefully following the recent challenges encountered by the utility and, with the regulator’s recent determination and Omers’ decision to write down its stake, we are assessing the best course of action to manage our loan exposure with the company. As part of careful management of our financing portfolio, we have processes in place to address these situations and minimise impacts to EDC.”