Fitch downgrades Greensands, shifts Southern Water view to negative

Fitch Ratings said it downgraded Greensands UK Ltd.’s long-term issuer default rating and senior secured rating to CC from B- and removed them from rating watch negative.

“The downgrade of Greensands’ IDR reflects our expectation that it may no longer receive operating cash inflows. This is because of the limited ability of the intermediate holding company structurally positioned between Southern Water Services Ltd. (SWS) and Greensands, Greensands Finance Ltd. (MidCo), to upstream dividends or interest on subordinated intercompany debt in the medium to long term. Greensands’ only source of cash flows is distributions from the MidCo.,” said Fitch in a press release.

Fitch also revised the outlook on Southern Water Services (Finance) Ltd.’s senior secured class A to negative from stable and affirmed the rating at BBB+.

“The revision of the outlook on SWSF’s secured debt reflects our expectation of a borderline financial profile for the rating in the next price control (AMP7), taking into account the large regulatory fine announced in June 2019 as well as adverse draft price determinations,” the agency said.

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