In a large, heavy saucepan, combine 1 1/2 cups of water with the milk, garlic, bay leaf, thyme, salt, and pepper. Bring to a boil and slowly add the polenta, whisking constantly. Reduce the heat to low and simmer, stirring often with a large wooden spoon, until the polenta thickens, about 25 minutes.
Add the butter and stir until melted. Add the cheddar and Parmesan, and stir well. Adjust seasoning, to taste, and serve hot.
Yield: 8 appetizer servings