‘Credit quality weakened’ at Yorkshire Water

In a statement, issued today, Moody’s said: “On March 20 2015, Moody’s downgraded the corporate family rating (CFR) of Yorkshire Water Services Limited (Yorkshire Water) to Baa2 from Baa1 (stable outlook). This rating action reflects that, despite having received a final regulatory price determination that is broadly in line with the company’s business plan submission, Yorkshire Water’s credit quality continues to be pressured by its sizeable derivatives portfolio and the material deterioration in the mark-to-market value (MTM) of that derivatives portfolio.”

Moody’s said it did not expect the company to face significant pressures from its operations. Moody’s also said it had taken into account that Yorkshire Water’s final price determination was largely in line with the company’s business plan submission; and the company has a solid operational performance track record. Moody’s said that management has taken a prudent approach to financial policy.

A Yorkshire Water spokesman said: “Yorkshire Water is currently reporting best ever levels of performance and has robust investment plans in place to deliver further service and environmental improvements over the

period 2015 to 2020. Following a lengthy, in-depth and challenging price review process, our economic regulator Ofwat has just given us the green light to invest an additional £3.8bn in the Yorkshire region over the

next five years. This will deliver better quality drinking water, cleaner rivers and higher standards of customer service, ensuring we take a significant step forward towards achieving our existing 25-year business objectives.”