Moody’s revises Severn Trent to negative

Moody's Investors Service said it affirmed the A3/P-2 ratings of Severn Trent Water Ltd. and A3 ratings of Severn Trent Utilities Finance plc, whose debt is guaranteed by Severn Trent Water.

The agency also affirmed the Baa1/P-2 ratings of Severn Trent plc and the A3 issuer rating of Severn Trent Water's subsidiary Dee Valley Water plc.

The outlook on all ratings was changed to negative from stable.

The action follows the Dec. 13 publication by the Water Services Regulation Authority (Ofwat), the economic regulator for water companies in England and Wales, of its final methodology for the 2019 price review, including guidance on allowed cost of capital for the period from April 2020 to March 2025 (AMP7).

Moody’s said the negative outlook reflects Severn Trent Water's exposure to the likely cut in allowed returns from 2020, as guided by the regulator in its final 2019 price review methodology.

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