The U.K. water sector is stable and likely to remain that way for 12 to 18 months, reflecting steady operating performance and price increases sufficient to offset rising costs, Moody’s Investors Service said today.
The industry outlook from analysts including Neil Griffiths-Lambeth said investor interest in England and Wales’ water sector has remained strong though credit pressures will build due to “a shifting regulatory landscape.”
A draft bill on planned regulatory and legal changes that the report said was “short on detail” is due to be considered by the U.K.’s Environment, Food and Rural Affairs Select Committee this fall and may go to Parliament for the next legislative session, May 2013 to May 2014.
That may lead to “a tougher operating environment for companies and a potential deterioration in the overall credit quality of the water sector,” the analysts wrote. “However, these changes will not take effect before the start of the next regulatory period in April 2015 and competition will not come quickly.”
The report made no mention of United Utilities Group Plc (UU/) or other water companies receiving a takeover bid as has been speculated in the U.K. press in recent months.
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