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Moody’s reviews Northumbrian for trim
Moody’s Investors Service said it placed on review for downgrade the Baa1 issuer rating of Northumbrian Water Ltd. and senior unsecured debt ratings of Northumbrian Water Finance plc, whose issuance is guaranteed by Northumbrian Water.
The rating action follows publication by the Water Services Regulation Authority (Ofwat), the economic regulator for water companies in England and Wales, of its final determination for the forthcoming regulatory period. The determination includes a significant cut in allowed returns which, in conjunction with challenging performance targets and gaps between allowed and requested expenditure, will weigh on Northumbrian’s credit quality.
Ofwat’s allowances for base operating and maintenance expenditure, excluding enhancement projects but including retail costs, were £2.7 billion, roughly £91 million below what the company requested, and efficiency gap of ca. 3.4%. The final determination also continued to include significant disallowances on enhancement expenditure of around £90 million.
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