Moody’s views Thames Water, Kemble for cut

Moody’s Investors Service said it placed on review for downgrade the Baa1 corporate family rating of Thames Water Utilities Ltd., as well as the A3 senior secured and Baa3 subordinated debt ratings of the Class A and Class B notes issued by Thames Water Utilities Finance plc. Concurrently, Moody’s has placed on review for downgrade the B1 senior secured rating of Thames Water (Kemble) Finance plc.

The rating actions follow 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, challenging performance targets and a substantial gap between the expenditure that Ofwat has allowed and the company’s original proposals.

Moody’s expects the determination to result in a downgrade to the ratings unless Thames Water and Kemble take significant mitigating action or Thames Water achieves a more favorable redetermination on appeal.

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