Moody’s Ratings has downgraded Thames Water Utilities Ltd.’s Probability of Default (PDR) rating to D-PD from Ca-PD. The rating action follows Thames Water’s restructuring plan, as announced by the company on 21 February 2025.
Moody’s has additionally affirmed Thames Water Utilities Ltd.’s Corporate Family Rating (CFR) at Caa3, and Thames Water Utilities Finance Plc’s backed senior secured debt (referred to as Class A under its finance documents) ratings at Caa3, backed subordinate debt (referred to as Class B under its finance documents) rating at C, and backed senior secured and subordinate MTN programme ratings at (P)Caa3 and (P)C respectively; and said the outlook on all entities remains stable.
In a statement, Moody’s said:
“The restructuring plan extends the final maturities and scheduled amortization payments of all existing debt obligations by two years, as well as structurally subordinating all existing creditors behind a soon-to-be-issued £1.5 billion super senior tranche (with a further £1.5 billion accessible later this year).
“We regard the restructuring plan to be a distressed exchange, and hence a default under our definitions. An amendment or extension of credit terms that results in a loss relative to the original promise to pay constitutes a distressed exchange.
“The effective date of the restructuring plan followings the sanctioning of the restructuring plan by the High Court on 18 February 2025. Certain dissenting creditors have appealed the decision, with an appeal hearing due to conclude by 13 March 2025. All actions taken by Thames Water to implement the restructuring plan prior to the conclusion of the appeal must be reversible in case the appeal is successful.
“In a few business days, we will upgrade the PDR to Ca-PD, consistent with the probability of default expectation embedded in Thames Water Utilities Ltd.’s CFR of Caa3.”
