The normally stable credit quality of rated U.K. water companies took something of a knock earlier this year, when Standard & Poor's Ratings Services downgraded four companies in the sector and revised the outlook on a related securitized transaction. The trigger for these actions was the start of a new, and in our view, relatively challenging, five-year pricing period on April 1, 2010. This change, introduced by sector regulator the Office of Water Services (Ofwat), illustrates an important caveat to our view of credit-supportive business risk--which we describe as excellent for the majority of rated issuers in the U.K. water sector--that of regulatory reset risk, when one review period transitions to another. We view the U.K. water sector as having...
Companies mentioned in this report are:
- United Utilities PLC
- Veolia Environnement S.A.
- Severn Trent PLC
- Sutton and East Surrey Water PLC
- Dwr Cymru (Financing) Ltd.
- Affinity Water Ltd.
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. SHOW LESS READ MORE >