Moody's cuts Wessex Water

Moody's Investors Service said it downgraded to Baa1 from A3 the backed senior unsecured debt ratings of Wessex Water Services Finance plc, whose issuance is guaranteed by Wessex Water Services Ltd. The outlook is stable.

This rating action concludes the rating review initiated on Dec. 20, following publication by the Water Services Regulation Authority, or Ofwat, the economic regulator for water companies in England and Wales, of its final determination for the forthcoming regulatory period, starting on April 1.

The downgrade reflects Wessex Water's exposure to a significant cut in allowed wholesale returns. Specifically, the downgrade reflects the expected pressure on the company's financial metrics, particularly interest coverage and Moody's expectation Wessex Water will, absent significant balance sheet strengthening, be unable to keep ratios in line with guidance for the previous A3 rating, the agency said.

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