Proactive Investors - Thames Water Utilities’ annual report for the year ending 31 March has provided a clear snapshot of the immense financial woes facing Britain’s largest water supplier.
The company reported a pre-tax loss of £4.39 billion, up from £218.7 million the previous year, reflecting surging impairment charges on its investments and rising debt expenses.
Thames Water’s financial situation resulted in credit rating downgrades by both Moody's and S&P Global in recent months.
Moody’s lowered its rating to Ba2 with a negative outlook, while S&P downgraded Thames Water's class A debt to CCC+ and its class B debt to CCC-.
These downgrades were influenced by concerns over Thames Water’s ability to extend its liquidity runway and its reliance on creditor support to manage upcoming debt maturities.
Thames Water's liquidity position could be critical by the end of 2024, depending on creditor decisions regarding the release of reserved cash and the company's ability to secure necessary funding.
Its future funding needs are tied to the upcoming ‘PR24’ regulatory review, which is expected to set investment and pricing parameters for the 2025-2030 period.
Discussions with creditors are ongoing as the company seeks to extend its liquidity runway to support these investments.
Thames Water has more than £17 billion of debt on the books, with the prospect of a begrudging nationalisation on the cards if a market-based solution cannot be found.