Southern Water has responded to yesterday’s downgrade by Fitch Ratings which saw Southern Water (Finance) PLC senior secured class A debt rating cut to 'BBB-' from 'BBB' and placed on Rating Watch Negative – SWF is Southern Water's financing company.
A statement issued yesterday afternoon by the water company said that ongoing uncertainty ahead of Ofwat’s Final Determination for the water sector, expected on 19 December 2024, has prompted Fitch Ratings to downgrade their assessment of the stability and financeability of the UK water sector, leading to a negative action on Southern Water’s credit rating.The statement says:
“Fitch has today announced a downgrade in its assessment of the stability and predictability of the regulatory environment for the UK water sector.
“This increase in sector risk has led to a downgrade of our credit rating.
“The downgrade by Fitch will have no impact on the services we provide to our customers. We maintain a strong liquidity position. Indeed, earlier this month, we secured additional financing whilst we await Ofwat’s Final Determination on our ambitious 2025-30 business plan.
“This move follows an announcement by fellow credit rating agency Moody’s of a sector downgrade earlier this month.
“Southern Water has raised over £1.5 billion of new debt financing over the past 12 months. Our shareholders have also injected more than £1.6 billion of fresh equity into the Southern Water group since 2021. This financing has allowed us to implement our turnaround plan, to deliver for our communities and the environment.”
Stuart Ledger, Chief Financial Officer of Southern Water, also commented:
“The action by Fitch Ratings today, following a similar move by Moody’s Ratings earlier this month, reflects the ongoing challenges and uncertainty faced by all companies operating in the UK water and wastewater sector.
“Ofwat’s Final Determination on 19 December should help to alleviate much of the uncertainty around the sector and enable us to continue to improve our services for customers, with the support of our shareholders and lenders.”
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