S&P lowers Southern Water (Greensands)

S&P said it lowered its issuer credit rating on Southern Water (Greensands) and its senior secured debt to B+ from BB-. The outlook is stable.

The recovery rating on the senior secured debt is 4, indicating an expectation of recovery prospects of about 30% in the event of a payment default.

U.K. regulated water utility Southern Water Services (SWS), the sole source of dividends to Southern Water (Greensands), is executing a capital restructuring program to enhance its financial resilience and improve interest coverage ratios in the upcoming regulatory period in AMP7 (2020-2025).

“SWS plans to fully redeem its outstanding £400 million class B subordinated debt, cover associated break costs, and reduce leverage at the regulated subsidiary to about 70% debt to regulated capital value (RCV) by issuing about £700 million debt at holding companies outside of the ring-fenced financing group (RFFG), part of it at Southern Water (Greensands),” S&P said in a news release.

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