Research Update: Thames Water Class A And B Debt Ratings Lowered On Delayed Shareholder Support; Outlook Negative

Thames Water Utilities Ltd. (Thames Water) announced last week that a £500 million tranche of shareholder equity for the current regulatory period, previously expected by end-March 2024, will not be provided imminently. This is because shareholders view the PR24 business plan as uninvestible under their current understanding of the arrangements that would be expected to apply to Thames Water during the next regulatory period (AMP8; from April 2025). Discussions with the regulator are still ongoing, and Thames Water is pursuing all options to secure the required equity from both existing and new shareholders. We think the difficult macroeconomic backdrop of the regulatory settlement and the numerous bespoke elements in Thames Water's PR24 business plan might complicate discussions. The outcome of

...- Thames Water Utilities Ltd. (Thames Water) announced last week that a ú500 million tranche of shareholder equity for the current regulatory period, previously expected by end-March 2024, will not be provided imminently. This is because shareholders view the PR24 business plan as uninvestible under their current understanding of the arrangements that would be expected to apply to Thames Water during the next regulatory period (AMP8; from April 2025). Discussions with the regulator are still ongoing, and Thames Water is pursuing all options to secure the required equity from both existing and new shareholders. - We think the difficult macroeconomic backdrop of the regulatory settlement and the numerous bespoke elements in Thames Water's PR24 business plan might complicate discussions. The outcome of these is a key part of our analysis since the ú3.25 billion equity injection would enhance Thames Water's financial health and enable it to deliver a ú18.7 billion investment plan critical to...

Research Update