Moody's lowers Wessex Water to negative

Moody's Investors Service said it changed the outlook on Wessex Water Services Finance plc to negative from stable following proposals by the Water Services Regulation Authority (Ofwat) that would give it greater influence over water companies' capital structures and dividends.

The agency also affirmed the A3 backed senior unsecured debt ratings of notes issued by the company and guaranteed by Wessex Water Services Ltd.

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.

Companies will need to demonstrate stronger financial metrics if they are to maintain credit quality in the context of less stable and predictable regulation, Moody's added.

The negative outlook also reflects Wessex Water's exposure to a likely significant cut in allowed returns from 2020 and more challenging performance targets, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.