Moody’s Downgrades UK Water Sector Outlook

Ratings agency Moody’s has changed its outlook for the UK water sector from stable to negative for the first time since first published in 2004.

In a report published today Moody’s says that the Water Services Regulation Authority’s (Ofwat) proposed cut in UK water companies’ allowed headline returns by a third from 2020 will weigh heavily on the credit metrics of many firms and underpins the negative outlook on the sector over the next 12 to 18 months.

Stefanie Voelz, Vice President — Senior Credit Officer at Moody’s commented:

“While UK water companies will review their financial and dividend policies in light of the probable cut in returns, some may ultimately be unwilling or unable to maintain their current credit quality.”

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