Fitch warns draft determination will inflict credit quality damage across sector
Credit rating agency, Fitch Ratings, has forecast that Ofwat’s draft price review determinations were “likely” to undermine the credit quality in the sector. The agency’s warning came as it downgraded its outlook for Anglian Water Services Financing debt to Negative from Stable because of Ofwat’s “significant decrease in allowed totex” relative to the company’s business plan.
Fitch has also affirmed its rating of Anglian’s holding company, Osprey Acquisitions, with a Negative Outlook on its anticipation of weak dividend cover capacity and uncertainty over the financial profile of Anglian Water. Fitch highlighted Osprey's cash flows and debt service significant reliance on dividends from Anglian Water.
Fitch said the regulator’s proposals “will put further pressure on the companies' financial metrics. The likelihood that the companies will not achieve allowed return on regulatory equity has increased, and we will incorporate this in our forecasts for each company in the next few months.”