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New Methodology For Inflation-Linked Debt Has No Immediate Effect On Ratings On U.K. Regulated Utilities Apr 09

  • ID: 1871009
  • April 2009
  • Region: United Kingdom, Great Britain
  • Standard & Poors
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  • Bournemouth Water Ltd.
  • Dee Valley Water PLC
  • National Grid Gas PLC
  • National Grid USA
  • Portsmouth Water Ltd.
  • Scottish Power Ltd.
  • MORE

Standard & Poor's Ratings Services' recently published new methodology on adjusting funds from operations (FFO) for inflation-linked debt issued by corporates has particular relevance for regulated utilities in the U.K., where inflation-linked debt issuance is prevalent. We have concluded that, at present, applying the revised calculation of FFO to the current capital structure of U.K. utility issuers will not have any rating implications. (For Standard & Poor's new methodology, please refer to "Methodology And Assumptions: Recognizing The Sustainable Cash Cost Of Inflation-Linked Debt For Corporates," published Feb. 10, 2009, on RatingsDirect.) In summary, the new Standard & Poor's methodology reduces FFO by the entire amount of interest expense, including the indexation component of inflation-linked debt, to arrive at a figure...

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

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- National Grid USA
- National Grid Gas PLC
- Kelda Group Ltd.
- United Utilities PLC
- Electricity North West Ltd.
- National Grid Electricity Transmission PLC
- Thames Water Utilities Ltd.
- Northumbrian Water Ltd.
- Israel Electric Corp. Ltd.
- Southern Water Services Ltd.
- South East Water Ltd.
- Wessex Water Ltd.
- National Grid Holdings One PLC
- National Grid Gas Holdings PLC
- Severn Trent PLC
- Sutton and East Surrey Water PLC
- Dwr Cymru (Financing) Ltd.
- National Grid PLC
- Anglian Water Services Financing PLC
- South Staffordshire Water PLC
- Bristol Water PLC
- Scottish Power Ltd.
- Portsmouth Water Ltd.
- Dee Valley Water PLC
- Bournemouth Water Ltd.
- Scotland Gas Networks PLC
- Southern Gas Networks PLC

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