Possible Clues:

• Water to north of IOW
• Cowes there, but no cows not given like this
• The ---, water N. of I. of Wight
• Sounds as you'd find cows there and so made a loan of it
• Thus a loan is made of the cows there, by the sound of it
• Lets on to be an English waterway
• Off we went to fish in the channel
• Thus, a loan, alone there at first
• Fish not deprived of oxygen in stretch of water
• South coast channel