The ratings on New Zealand water-services provider Watercare Services Ltd. reflect the company's natural-monopoly position and stable and strong market demand profile. These strengths are partly offset by a more aggressive and untested, albeit more flexible, pricing regime, and an aggressive financial risk profile. The ratings on Watercare benefit from moderate uplift due to ownership support, which in turn is attributable to the essential nature of the service the company provides, and the status of the owners as the company's primary customers. This support is demonstrated by the recent establishment of a guarantee of all of Watercare's debt by its major 42% shareholder, Auckland City Council (ACC; AA/Stable/A-1+), with future debt covered by the guarantee only if certain conditions are...
Companies mentioned in this report are: Watercare Services Ltd.
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