Moody’s has downgraded Thames Water’s credit rating to “junk” status, indicating concerns about the utility company’s ability to meet its debt obligations.
The downgrade suggests that Thames Water is at risk of defaulting on its debt, adding to its financial challenges. This move follows the recent announcement by regulator Ofwat to impose a “turnaround oversight regime” on the company.
Ofwat also opposed Thames Water’s proposed 44% increase in consumer bills over the next five years, suggesting a more modest 23% rise to £535 annually instead.
Moody’s expressed doubt about Thames Water’s ability to attract new investment under the current plans, leading to the downgrade from Baa3, an investment-grade rating, to Ba2, a “junk” status. The agency also maintained a “negative outlook” for the company and its debt.
In response, Thames Water stated that it is actively seeking new equity funding to continue operations. The company assured that it remains committed to engaging with investors and creditors to extend its liquidity.
Despite these financial difficulties, Thames Water emphasized that it will continue to provide services and focus on its turnaround plan. Earlier this month, the company warned that it might run out of money by the end of next May, although it had £1.8 billion in cash reserves at the end of June.
