Affinity Water substitutes its Cayman-based bond issuer for new UK operation

Affinity Water has completed the removal of its Cayman Island-based bond issuer from its corporate structure.

The company has successfully substituted its overseas operation, Affinity Water Programme Finance Limited, with a new UK-based issuer, Affinity Water Finance Plc. Affinity Water Programme Finance Limited will be liquidated.

The issuer substitution forms part of the company’s response to political and regulatory challenges on complex financing structures and the use of offshore funding vehicles.

Moody's affirmed Affinity Water's ratings following the issuer substitution. It said all outstanding obligations in relation to £764.2m of bonds had been transferred to the new UK entity, and remained guaranteed by Affinity Water Limited. It has withdrawn its ratings for Affinity Water Programme Finance Limited.

It said: “The rating affirmation reflects Moody's view that the issuer substitution does not adversely impact the rights of the lenders, the credit enhancing features incorporated within Affinity Water Limited's highly-covenanted financing structure, or the financial risk profile of the operating company, save for certain transaction and possible tax costs, which Moody's considers immaterial in the context of the size of the overall business.”