United Utilities Group PLC Credit Rating Downgrade from S&P (0998E)
February 25 2020 - 10:43AM
UK Regulatory
TIDMUU. TIDM51TW TIDMBK69 TIDM77WS
RNS Number : 0998E
United Utilities Group PLC
25 February 2020
United Utilities Group PLC - LEI: 2138002IEYQAOC88ZJ59
United Utilities PLC - LEI: 213800KYT12UFB2VE455
United Utilities Water Finance PLC - LEI:
213800313INX42GDLR44
United Utilities Water Limited - LEI: 213800RQ5FMB2GQ69174
Credit Rating Downgrade from S&P
United Utilities notes the decision of S&P Global Ratings
("S&P") to downgrade United Utilities PLC's ("UU's") and United
Utilities Water Limited's ("UUW's") credit ratings one notch which
was announced on 25 February 2020.
Following the announcement, S&P's long-term issuer credit
ratings for UUW and UU have been downgraded from A- to BBB+ (stable
outlook) and BBB+ to BBB (stable outlook), respectively, and for
Notes issued by UUW and UU have been downgraded from A- to BBB+ and
BBB to BBB-, respectively.
Commenting on the ratings action from S&P, Russ Houlden,
Chief Financial Officer of United Utilities Group PLC ("UUG"),
said:
"On 29 January 2020, when we announced acceptance of the Final
Determination in respect of Ofwat's PR19 price review, we also
announced the group's dividend policy, capital structure and credit
ratings targets for the AMP7 regulatory period.
"We have consistently maintained a robust capital structure,
with UUG gearing, measured as group net debt to regulatory capital
value ("RCV"), remaining stable over the last ten years and
comfortably within our target range of 55 to 65 percent. We
confirmed that we would retain this target range over AMP7 in order
to maintain efficient access to debt capital markets throughout the
economic cycle.
"With regard to credit ratings targets, we announced that
assuming no significant changes to existing ratings agency
methodologies or sector risk assessments, the group aims to
maintain a long-term issuer credit rating for UUW of at least A3
with Moody's, a senior unsecured debt rating for UUW of at least A-
with Fitch, and a long-term issuer credit rating for UUW of at
least BBB+ with S&P. We also said that we expected S&P to
resolve its negative outlook on the group's ratings (that was
assigned in August 2019) during February 2020.
"Both Moody's and Fitch use net debt to RCV along with an
interest cover ratio as their primary credit metrics. In taking its
ratings action today, we recognise that S&P has considered the
likely impact of the PR19 Final Determination on its primary credit
metric - adjusted funds from operations ("FFO") to net debt - and
has concluded that FFO to debt is likely to be sustained at a level
commensurate with assigning a BBB+ rating for UUW, which is in line
with our target. It is differences in the respective ratings agency
methodologies which gives rise to us targeting an A3 rating with
Moody's, a senior unsecured debt rating of A- with Fitch, and a
rating of BBB+ with S&P for UUW.
"This package of credit ratings means that UUW is one of the
highest rated companies in the UK water sector, highlighting our
robust credit quality, which should secure continuing efficient
access to funding in the debt capital markets."
For further information, please contact Brendan Murphy,
Treasurer, United Utilities Group PLC, on 0345 070 2426.
United Utilities Group PLC's ordinary shares trade on the London
Stock Exchange and its ADRs, each equal to two ordinary shares,
trade over the counter under the Trading Symbol 'UUGRY'.
END
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