S&P ratings agency has again cut the rating on Thames Water’s £16 billion of debt by five notches – further deepening the water company’s ongoing financial crisis.

The cut moves the debt further into “junk” territory - S&P has cut the rating on Thames’ highest-ranked ‘class A’ and lower level ‘class B’ debt to ‘CCC+’ and ‘CCC-’respectively, from ‘BB’ and ‘B’ previously.

The agency said:

“We believe Thames Water is now facing an acute near-term liquidity shortfall. We see material risk of a debt restructuring, which we would consider akin to a default.”

S&P Global Ratings had previously downgraded Thames Water credit ratings at the end of July, saying at the time:

“We do not believe Thames will have a remedy plan to cover liquidity needs for next 12 months before autumn 2024…

“In our view, Thames Water's liquidity has deteriorated to a less-than-adequate position as we forecast that the company will not be able to cover its financial needs by 1.1x over the 12 months from the end of June 2024.”