(Reuters) – Ratings firm Moody’s slashed Britain’s Thames Water’s corporate family rating (CFR) on Thursday, its second downgrade on the troubled water provider in nearly four months, taking it deeper into junk territory.
The CFR of debt-laden Thames Water has been downgraded to “Caa3” from “Caa1”. In September, Moody’s had cut Thames Water to “Caa1” from “Ba2”, which is considered a junk rating.
The latest downgrade comes a day after the largest British water provider said that the restructuring plan to extend its liquidity runway was approved by creditors holding over 90% of secured debt.
The plan provides up to 3 billion pounds ($3.71 billion) in new funding, along with access to cash reserves and debt extensions, crucial for the firm burdened with 17 billion pounds in debt.
However, 84.5% of the lower-ranked Class B creditors voted against the plan.
Thames Water, which serves 16 million people in and around London, is at the centre of a crisis over relentless sewage dumping, crumbling pipe networks and huge debts.
The downgrade may deter new equity funding and increases the likelihood of a more severe haircut to senior debt than embedded in the previous ratings, Moody’s said in a note.
The agency also upgraded Thames Water’s outlook to stable from negative.
($1 = 0.8091 pounds)
(Reporting by Angela Christy and Mrinmay Dey in Bengaluru; Editing by Shailesh Kuber)
