S&P Global Ratings has downgraded four of the 11 water companies that accepted their final determinations in Ofwat’s price review. It has placed two of the firms that appealed against their determinations to the Competition and Markets Authority (CMA) on CreditWatch negative with one on negative.
The four single-notch downgrades were on: Affinity Water Finance, Sutton and East Surrey Water, United Utilities and Wessex Water Services Finance each with stable outlooks.
Of the three companies that appealed, S&P is placing ratings on Anglian Water and Northumbrian Water at Creditwatch negative “as the outcome of the appeal remains uncertain and the current final determination indicated increased financial pressure.” And Yorkshire Water sees its rating turn negative as the final determination “exacerbates downside risks”
S&P affirmed its rating for South East Water, South Staffs Water, Southern Water, Portsmouth Water, Severn Trent Water and Thames Water.
S&P had on 7 B February lowered its rating on Dwr Cymru debt and on q 17 February affirmed its ratings on Severn Trent Water.
The ratings agency said while UK water faced increased pressure from regulation the companies “still operate with a strong regulatory advantage.” It said water sector ratings “still benefit from our view of low country risk and a strong regulatory advantage.” and it added: we think the sector will generally retain good access to capital.