Moody's trims Thames Water

Moody's Ratings said it downgraded to Baa3 from Baa2 the corporate family rating of Thames Water Utilities Ltd. Concurrently, the agency trimmed the backed senior secured debt ratings of Thames Water's guaranteed finance subsidiary Thames Water Utilities Finance plc to Baa2 from Baa1 and its backed subordinated debt ratings to Ba3 from Ba1. The outlook on both companies was changed to negative from stable.

The downgrades follow the March 28 announcement by Thames Water that it will not receive an additional equity injection of £500 million by March 31, 2024, as previously envisaged, the agency said. Any future investment is unlikely before the end of June, which is when the draft determination for the April 1, 2025-March 2030 regulatory period is due.

“While the company continues to have access to £2.4 billion of liquidity as at Feb. 29, 2024, which would support ongoing cash outflows, including planned investment, until May 2025, the downgrade of Thames Water's CFR reflects that a delay in the equity injection falls short of Moody's expectation embedded in the previous rating and could add pressure to financial metrics towards financial year-end March 2025 in the absence of future equity injections.

“It also increases uncertainty over the shareholders' commitment to provide further equity during the next regulatory period, in the context of the company's business plan indicating an additional equity requirement of £2.5 billion in the next regulatory period,” the agency said in a press release.

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