UK WATER FINANCE: Holdcos face renewed dividend threat

摘要

The tighter restrictions that Ofwat plans to impose on dividend payments by regulated water utilities will make life harder for the various holding companies that sit above the operating businesses in many current corporate structures. These holdcos rely on upstreamed dividends to meet their own debt service obligations, and could well see their own credit ratings - and ability to raise debt -threatened if those payments face inter- ruption. Moody's, which currently rates the debt of the Thames, Severn Trent, and UU holdcos, confirmed that greater restrictions on dividends would be a "credit negative" for these entities. The ratings agency said the move would also reduce their scope to strengthen the credit quality of the underlying utilities by raising debt and injecting the proceeds into the operating companies as equity.