20th Dec 2019 18:31
(Alliance News) - Moody's Investors Service said Friday it has placed on review for downgrade the A3 issuer rating of Severn Trent Water Ltd, the A3 senior unsecured debt ratings of Severn Trent Water Utilities Finance PLC, whose issuance is guaranteed by Severn Trent Water.
It has also placed under review the Baa1 issuer and senior unsecured debt ratings of Severn Trent PLC.
The P-2 short-term ratings are unaffected, Moody's noted.
The rating action follows publication by the Water Services Regulation Authority, the economic regulator for water companies in England and Wales, of its final determination for the forthcoming regulatory period, Moody's said.
The determination includes a significant cut in allowed returns which, in conjunction with challenging performance targets, will weigh on Severn Trent Water's credit quality.
Moody's said that rating under review reflect Severn Trent's exposure to the significant cut in allowed returns from 2020 and more challenging targets.
Moody's expectation that these will weigh on the company's financial metrics and, absent measures to strengthen its balance sheet and/or significant outperformance, key ratios will fall below Moody's guidance for the current rating category.
Severn Trent shares closed 0.4% lower in London at 2,505.00 pence each on Friday.
By Loreta Juodagalvyte; [email protected]
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