Thames Water credit rating slashed as administrators approached
Thames Water credit rating slashed as administrators approached
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Moody’s changes outlook on firm from stable to negative as financial plans ‘do not provide attractive risk-return balance’. Thames Water’s debt has been downgraded as the struggling utility company seeks to secure £3bn in emergency funding to stave off collapse, after it emerged that the government has approached potential administrators.
The rating agency Moody’s downgraded the company’s debt rating, and increased its view of the probability of default, changing its outlook on Thames Water from stable to negative. Moody’s said that it downgraded Thames as it believes its proposed financial plans “do not provide an attractive risk-return balance for existing or new investors”.
In a market note, Moody’s said: “This may deter new equity funding and increases the likelihood of a more severe haircut to senior debt than embedded in the previous ratings. Either through a potential future creditor-led debt restructuring or one that is imposed as part of a special administration process, should the company meet the criteria for special administration to be called.”.
Thames Water, which provides water and sewerage services to 16 million customers in London and south-east England, has been on the brink of collapse for months as it struggles under a £15bn debt pile. On Thursday it emerged that the UK government had approached multiple restructuring advisers for the role of special administrator for Thames Water if the troubled utility fell into bankruptcy.
