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Moody's eyes Affinity Water for cut
Moody's Investors Service said it placed on review for downgrade the Baa1 corporate family rating of Affinity Water Ltd. as well as the A3 senior secured debt rating of class A notes and Baa3 subordinated rating of class B notes issued by its finance subsidiaries and guaranteed by Affinity Water.
The rating action follows publication by the Water Services Regulation Authority (Ofwat), the economic regulator for water companies in England and Wales, of its final determination for the forthcoming regulatory period. The determination includes a significant cut in allowed returns which, in conjunction with challenging performance targets and gaps between allowed and requested expenditure, will weigh on Affinity Water's credit quality, Moody’s said.
Ofwat's allowances for base operating and maintenance expenditure, excluding enhancement projects but including retail costs, were £1.2 billion, about £12 million below what the company requested, but the final determination also included significant disallowances on enhancement expenditure of £83 million, the agency said.
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