Moody's lowers Thames Water view to negative

Moody's Investors Service said it changed the outlooks to negative from stable on Thames Water Utilities Ltd. and Thames Water (Kemble) Finance plc, the financing subsidiary of Thames Water's holding company.

This outlook revision follows proposals by the Water Services Regulation Authority (Ofwat) that would give it greater influence over water companies' capital structures and dividends, Moody's explained.

Moody's also said it changed to negative the outlook on Thames Water's financing subsidiaries, Thames Water Utilities Finance Ltd. and Thames Water Utilities Cayman Finance Ltd.

The agency also said it affirmed Thames Water's Baa1 corporate family rating, A3 senior secured ratings of Thames Water Utilities Cayman Finance and Thames Water Utilities Finance, along with the Baa3 subordinated debt ratings of Thames Water Utilities Cayman Finance.

Ofwat's proposed measures are aimed at bolstering companies' financial resilience and mark a change in direction for the regulator in reaction to mounting political and public pressure on the sector, Moody's explained.

If implemented, the proposals would primarily penalize highly leveraged operating companies like Thames Water, curbing their earnings in an already tough regulatory environment, the agency said.

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