South East Water has sought to reassure investors and customers after S&P Global Ratings downgraded one of the company’s credit ratings, insisting the move will not affect its day-to-day operations or its plans to invest in improving services.
The ratings agency announced the downgrade on 24 July following its assessment of the company’s financial position, shortly after South East Water secured a £200 million liquidity backstop to support a planned bond issuance. In response, the company said it remains financially resilient and well positioned to deliver its turnaround programme and AMP8 investment plans.
In a statement, Andrew Farmer, Chief Financial Officer at South East Water, said:
“As a condition of its operating licence with the regulator, Ofwat, South East Water must maintain at least two investment grade credit ratings. The Board of South East Water has agreed a series of undertakings with Ofwat, in lieu of other enforcement action, that will secure the Company’s return to compliance with its licence conditions. This relates to South East Water’s credit rating downgrade to sub-investment grade by Moody’s on 28 May 2026.
“The agreed package places customer redress at its heart and will fund £13 million for further resilience investment, £5 million to accelerate smart metering for businesses, £5 million for household water butts, £5 million for on-site storage and smart meters for high-usage businesses, £1 million for critical settings water supply, and £1.5 million for a community relief fund.
“The Company will engage with Ofwat following the ratings action by S&P.
“The ratings action by S&P has resulted in South East Water (Finance) Limited’s backed and underlying senior secured rating changing to BB+ from BBB-.
“S&P’s ratings action relates to the persistent operational challenges South East Water has faced over the past few years. South East Water continues to maintain strong liquidity and a resilient capital structure. As announced today, the Company has agreed terms for £200,000,000 of new liquidity.
“South East Water is fully committed to learning from the past and transforming its business. The focus is on delivering its long-term business plan, the most ambitious ever produced. It details a proposed investment of £1.9 billion over five years designed to improve customer service, reduce customer supply interruptions and strengthen network resilience.”