Southern Water credit rating downgraded amid 'challenging funding conditions'

Ratings bureau Fitch has placed the inferior company's indebtedness 1 measurement supra junk status, informing that determination is simply a increasing hazard it volition default connected its debt

Southern Water has been deed with different recognition standing downgrade arsenic Fitch Ratings knocked down its creditworthiness to conscionable 1 supra junk status.

The move, announced connected Tuesday, comes amid "challenging backing conditions" and a heightened hazard of the inferior steadfast defaulting connected its debts. At the aforesaid time, Southern Water recovered itself being placed nether "rating ticker negative" by Fitch, suggesting further downgrades could beryllium connected the horizon.

This antagonistic outlook is partially fuelled by doubts astir whether manufacture regulator Ofwat volition hold to Southern Water's projected important summation successful user h2o bills implicit the adjacent 5 years, which according to Fitch, places unit connected the company's fiscal health. While Southern Water has projected an 84% hike successful the mean h2o bill, indications from Ofwat person pointed towards a much blimpish headdress of astir 44%.

A definitive determination from the watchdog is expected successful December. With much than £6bn successful debts, Southern Water ranks arsenic 1 of the UK's astir indebted h2o companies aft Thames Water.

Southern Water, which supplies 4.7 cardinal radical crossed the southbound and south-east of England, is controlled by Macquarie, the Australian concern bank. Macquarie was a large capitalist successful Thames Water during the years erstwhile it besides piled up billions of pounds worthy of debt, which has led it to question exigency backing successful caller weeks to support the institution running.

Fitch has suggested that a affirmative result from Ofwat successful December mightiness easiness immoderate of the fiscal unit and could effect successful the removal of the antagonistic outlook. This follows Moody’s determination past week to downgrade Southern Water’s recognition standing to junk, placing it beneath concern grade.

Stuart Ledger, CFO of Southern Water, commented: "The enactment by Fitch Ratings today, pursuing a akin determination by Moody’s Ratings earlier this month, reflects the ongoing challenges and uncertainty faced by each companies operating successful the UK h2o and wastewater sector.

"Ofwat’s Final Determination connected 19 December should assistance to alleviate overmuch of the uncertainty astir the assemblage and alteration america to proceed to amended our services for customers, with the enactment of our shareholders and lenders."

An Ofwat spokesperson remarked: "We enactment Southern Water’s engagement with creditors successful respect of its financing documents.We volition proceed to prosecute with the institution and intimately show its advancement arsenic it delivers its turnaround program to amended show and fiscal resilience."