Fitch puts Wales & West on negative watch

Fitch Ratings said it placed Wales & West Utilities Ltd.'s long-term issuer default rating of BBB on rating watch negative. Fitch also placed Wales & West's and Wales & West Utilities Finance plc's class A senior secured ratings of A- and class B senior secured ratings of BBB on RWN.

“The RWNs reflect pressure on WWU's financial profiles from the outcome of the draft determination (DD) for the next regulatory period, RIIO-GD2 (April 2021-March 2026). They also reflect our expectation of a material decline in cash flow generation resulting in considerably weaker post-maintenance interest cover ratios (PMICRs) and, in turn, a breach of our negative rating sensitivities, which could result in a one-notch downgrade of the ratings,” Fitch said in a press release.

The agency said it expects to resolve the RWN within the next six months after reviewing the final determination and considering any mitigating measures.

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