Southern Water says that Ofwat’s Final Determination in December should help to alleviate much of the uncertainty around the sector, following ratings agency Moody’s downgrade of the UK water sector on Wednesday.

The water company said that ongoing uncertainty ahead of Ofwat’s Final Determination for the water sector, expected on 19 December 2024, had prompted Moody’s Ratings to downgrade their assessment of the stability and financeability of the UK water sector.

Commenting in response to the ratings action, Southern Water said:

“This view has then led to a negative action on our credit rating.

“Moody’s has today announced a downgrade in its assessment of the stability and predictability of the regulatory environment for the UK water sector. This increase in sector risk has led to a downgrade of our credit rating.

“The downgrade by Moody’s will have no impact on the services we provide to our customers. As Moody's acknowledges, we maintain a strong liquidity position. Indeed, earlier this month, we secured additional financing whilst we await Ofwat’s Final Determination on our ambitious 2025-30 business plan.”

Over the past 12 months Southern Water has raised over £1.5 billion of new debt financing and shareholders have also injected more than £1.6 billion of fresh equity into the Southern Water group since 2021. The water company said the financing has allowed it to implement its turnaround plan, to deliver for its communities and the environment.

Stuart Ledger, Chief Financial Officer of Southern Water, commented:

“The action by Moody’s Ratings today reflects the growing challenges and uncertainty faced by all companies operating in the UK water and wastewater sector. Ofwat’s Final Determination on 19 December should help to alleviate much of the uncertainty around the sector and enable us to continue to improve our services for customers, with the support of our shareholders and lenders.”