Thames Water - comment

The downgrade is a mere reaction to the company’s approval request and therefore admission of tight liquidity, but it could trigger further sales of the bonds. As we seem to near the end game of a restructuring resolution, rating agency Standard & Poor's has downgraded the ratings of the Class A / B notes to CCC+ / CCC- respectively from BB and B with a negative outlook. To recap, the company has asked its creditors to approve the release of £380 million of cash, which is reserved under its financial covenants, and draw on its £420 million revolving credit line by December. This has been telegraphed clearly by Thames Water as it negotiates with its creditors for a waiver and it is finally reflected in the ratings of its debt.