Thames Water’s Credit Rating Downgraded to ‘Junk’ by Moody’s Due to Debt Woes
The UK’s largest water company, Thames Water, is facing financial difficulties and is under investigation by the Environment Agency for pollution and waste spills.
Thames Water is struggling with a debt of £15.2 billion and defaulted on some payments after its parent company withdrew £500 million in interest payments. This has raised concerns about the company’s survival.
Adding to its financial woes is the downgrade by Moody’s, which lowered Thames Water’s credit rating from Baa3 to Ba2, indicating a higher risk of default.
Furthermore, Thames Water’s shareholders, including Canadian pension scheme Omers and USS, and the UK universities retirement fund, have declined to provide a financial lifeline after Ofwat rejected the company’s business plan.
Ofwat also rejected Thames Water’s proposal to increase customer bills by 44% over the next five years.
Thames Water acknowledges Moody’s rating downgrade and is working with Ofwat to ensure financial stability.
The company’s management is committed to seeking new funding and exploring options to extend its liquidity runway.
Thames Water is currently in negotiations with Ofwat, with a final decision expected in December.
The company remains focused on delivering its turnaround plan and providing services to customers.
Moody’s predicts significant penalties for Thames Water related to pollution and sewer flooding.
Improving operational performance and securing equity injection are key for Thames Water to upgrade its ratings, as per Moody’s.
