Thames Water faced another credit rating downgrade amid concerns it could run out of funds by December.
S&P lowered the utility’s class A and class B debt ratings from BB and B to CCC+ and CCC-, with a negative outlook on its financial position.
The agency stated, “We have downgraded our assessment of Thames Water’s liquidity from ‘less than adequate’ to ‘weak’ and revised its management and governance rating from ‘moderately negative’ to ‘negative.'”
Last week, Thames Water acknowledged the risk of depleting its cash reserves by December as it struggles to delay billions in debt repayments. The company is at significant risk of entering the Government’s special administration regime (SAR), which would allow it to continue providing essential services while under administration.
Thames Water is at significant risk of being placed into the Government’s special administration regime (SAR), a process that would enable the company to maintain essential services while under administration. The potential cost to taxpayers for this outcome is estimated at £10 billion over five years, though the duration of Thames’ stay in the SAR remains uncertain.
The Government has prepared contingency plans to place Thames Water into the special administration regime (SAR) if needed, a process previously used when energy provider Bulb collapsed in 2021.
Thames Water, the largest water company in the UK, serves 16 million customers across London and the South East. In its latest update, the company reported having £1.15 billion in cash at the end of August, along with an additional £400 million in undrawn loan facilities.
