--- title: "Southern Water's debt, results and credit ratings" language: en canonical: https://dossiertwist.com/dossiers/southern-water-services-limited/debt-and-results/ as_of: 2026-10-17 keywords: ["Southern Water Services Limited","Southern Water","02366670","water and wastewater company","South East England","Greensands Holdings","Macquarie Asset Management","Macquarie Super Core Infrastructure Fund","Asterion Industrial Partners","Sandstone Water Holdings","Ofwat","Environment Agency","Drinking Water Inspectorate","sewage discharges","2025 recapitalisation","SWS Scheme","Greensands (UK) Limited administration","ownership history","board of directors","AMP8 frameworks"] --- # Southern Water's debt, results and credit ratings **Question.** How is Southern Water Services financed, and what do its 2025–26 accounts, ratings and equity totals show? **Answer.** Southern Water Services borrows through its subsidiary SW (Finance) I PLC, which on-lends what it raises on the same terms and was owed £6,941.0m by the company at 31 March 2026; the loans are guaranteed and secured over the property of the company, SW (Finance) I and II, SWS Holdings and SWS Group Holdings, and the three outstanding charges on the company's register are in favour of Deutsche Trustee Company Limited. For 2025–26 the company reported revenue of £1,443.2m, a regulatory capital value of £8,391.5m and net debt of 67% of that value, but its annual report gives two figures for the loss of the year, £(112.6)m in the highlights and £(128.3)m in the audited income statement; according to a press report the company accepted that the first was wrong. The annual report also gives Moody's rating both as Ba1, below investment grade, and as Baa3; according to a press report the company said Ba1 stable was correct, and SW (Finance) I PLC's report records that Fitch upgraded the senior secured debt rating from BBB- to BBB on 28 July 2026. Totals of the equity invested since 2021 differ by source and scope: over £2.5 billion into the group in the annual report, before a further £300 million commitment, and more than £2.8 billion in Southern Water in Asterion's statement. ## The bond programme and its security - Analysis: SW (Finance) I PLC (company number 13677506) is a non-trading financing company whose parent is Southern Water Services Limited. Under their loan agreement it on-lends to Southern Water Services an amount equal to each bond or other debt it raises externally, at the same interest rate and on the same repayment terms. Its annual report for the year ended 31 March 2026 shows loans to Southern Water Services of £6,941.0m (2025: £5,280.4m), long-term borrowings of £6,654.1m (2025: £4,943.1m), and finance income from the loan to Southern Water Services equal to its finance costs, £427.3m (2025: £335.6m). At 31 March 2026 its loans and other borrowings totalled £6,955.5m (2025: £5,294.9m), of which £301.4m fell due within one year. They comprised Class A bonds of £6,045.6m (2025: £4,418.3m), including three issues with no balance a year earlier (£750m 6.875% fixed rate 2032, £625m 5.750% fixed rate 2030 and £450m 6.125% fixed rate 2033), while the £350m 6.640% 2026 bond, carried at £351.8m a year earlier, no longer appeared; two index-linked 'Artesian' loans from SW (Finance) II Limited of £473.5m (£165m 4.076% 2033) and £421.9m (£156.5m 3.635% 2032); and a £14.5m reserve facility. [src-045] - Analysis: After the balance-sheet date, SW (Finance) I PLC reports, Southern Water Services repaid the £14.5 million reserve facility on its behalf on 24 April 2026. On 14 May 2026 SW (Finance) I PLC issued a new £300 million 6.875% bond maturing on 14 November 2034 and advanced the same amount to Southern Water Services on identical terms; the same day Southern Water Services repaid £181.0 million of intercompany debt, which the issuer used to buy back for cancellation, through a public tender offer, £181.0 million of its A14 bond maturing on 30 March 2027. The issuer's report names Stuart Ledger and Richard Manning as the directors who served during the year and up to the date of signing, Richard Manning as company secretary in the period and at signing, HSBC Bank Plc as its bankers and Deloitte LLP as its auditor. Deloitte states that the board appointed it on 10 June 2022 to audit the financial statements for the year ending 31 March 2023 and later periods, and its report is dated 29 July 2026. [src-045] - Analysis: SW (Finance) I PLC's report states that these loans are guaranteed and secured under a guarantee and security agreement (the Security Agreement) over the entire property, assets, rights and undertaking of each of Southern Water Services Limited, SW (Finance) I Plc, SW (Finance) II Limited, SWS Holdings Limited and SWS Group Holdings Limited, in the case of Southern Water Services to the extent permitted by the Water Industry Act 1991 and its licence. The 2020–21 annual report of the group's then parent described the financing group's security differently, as a charge over the share capital of SWS Group Holdings with no security over Southern Water's individual regulated operating assets; the records do not reconcile the two descriptions. SWS Holdings Limited's accounts for the year ended 31 March 2022, approved on 29 July 2022, state that its share capital had been provided as security under a fixed charge for the borrowings of Southern Water Services (Finance) Limited and Southern Water Services Limited. [src-045] [src-091] [src-089] - Analysis: Companies House's register of charges for Southern Water Services Limited, as retrieved for this review, shows four registered charges, three outstanding and one satisfied. Two charges created on 23 July 2003 remain listed as outstanding, both in favour of Deutsche Trustee Company Limited as security trustee for itself and the secured creditors: a security agreement (delivered 7 August 2003) giving fixed and floating charges over the company's undertaking, and a security trust and intercreditor deed (delivered 6 August 2003). For both, the register notes that part of the property or undertaking no longer forms part of the charge. The most recent registered charge, code 0236 6670 0004, was created on 30 September 2022 and delivered on 12 October 2022 in favour of Deutsche Trustee Company Limited (and its successors in title and permitted transferees); the register describes it as containing a fixed charge and lists it as outstanding. An earlier debenture created on 28 June 2002 (delivered 9 July 2002) in favour of The Royal Bank of Scotland PLC as trustee for the secured parties is shown as satisfied on 3 September 2003. [src-039] ## Payments to the holding companies, 2021–2022 - Analysis: SWS Holdings Limited (company number 04324499), a non-trading holding company for Southern Water Services Limited whose immediate parent is SWS Group Holdings Limited, reported in its accounts for the year ended 31 March 2022 that it received no dividends from Southern Water Services in that year (previous year: £4.0m) and paid none to SWS Group Holdings (previous year: £4.0m). Its net assets of £437.6m (2021: £46.3m) consisted of its investment in Southern Water Services, which recorded a loss of £761.5m for the year to 31 March 2022 and had net assets of £589.0m at that date. The accounts of Southern Water (Greensands) Financing plc (company number 07581353) for the same year record that on 22 July 2022 the board of Southern Water Services approved a distribution of £17.5m to Southern Water Capital Limited, comprising a partial redemption of preference shares of £5.3m including accrued interest and a payment of £12.3m of outstanding accrued preference-share interest, to facilitate interest payments at the 'Midco' and 'Holdco' levels over the following 12 months. [src-089] [src-104] - Analysis: The same accounts describe Southern Water (Greensands) Financing plc, whose immediate parent was Greensands (UK) Limited, as a non-trading financing company for Greensands Senior Finance Limited. Its facility agreements of £75m, £150m, £100m and £250m, maturing in 2025 and 2026 and on-lent to Greensands Senior Finance, stood at £390.8m at 31 March 2022 (2021: £723.8m), after £353.8m of £736.1m of external loans was repaid early following Macquarie Asset Management's acquisition of a majority stake in September 2021. The facilities were guaranteed under a group Security Agreement over the property of Southern Water Services Limited, Southern Water Services (Finance) Limited, SWS Holdings Limited and SWS Group Holdings Limited (for Southern Water Services, to the extent permitted by the Water Industry Act 1991 and its licence). According to the administrators' summary of a consultation letter that Greensands Holdings Limited sent its investors on 12 March 2025, notes with about £427m outstanding issued by Southern Water (Greensands) Financing plc fell due during 2025 and could not be repaid from available liquidity. [src-104] [src-066] ## The 2025–30 price control and Ofwat's monitoring - Analysis: According to the supplementary prospectus of 30 July 2025, Ofwat's PR24 final determination for 1 April 2025 to 31 March 2030, published on 19 December 2024, gave Southern Water Services Limited a total expenditure allowance of £8.6 billion (about £8 billion subject to cost sharing), 11% lower than in the company's draft determination response, and removed the 'inadequate' categorisation and £54 million financial penalty because the company had improved its plan. It allowed £6.6 billion to be collected through bills over 2025–30, increasing average household bills by £221 (53%) between 2024–25 and 2029–30 before inflation. The company's board asked Ofwat to refer the final determination to the Competition and Markets Authority, which obtained an extension of its deadline to 17 March 2026. SW (Finance) I PLC's 2025–26 report and the company's 2025–26 annual report state that the CMA's redetermination was published on 10 March 2026. [src-017] [src-045] - Analysis: On 5 November 2025, publishing its Monitoring Financial Resilience report for 2024–25, Ofwat said that Thames, Southern and South East were in cash lock-up under their licences and could not pay dividends without Ofwat's consent. The table in the same press release lists 'South East and Southern' together with Thames against the 'Action Required' financial-resilience status, for which Ofwat's monitoring approach is 'Active'. The table was retained only as extracted text, in which 'South East and Southern' stands on a separate row following the 'Action Required' row. [src-115] ## The 2025–26 accounts - Analysis: The key highlights of Southern Water's annual report for the year ended 31 March 2026 show total revenue of £1,443.2m (2024–25: £992.7m; 2023–24: £886.5m), capital investment of £1,167.1m (2024–25: £976.6m) and no external dividends; the report states that Southern Water Services has paid no dividends to external shareholders since 2017–18, and records additional investment into the group by shareholders of £900 million, with a further £300 million committed after the year end. The same highlights give a regulatory capital value of £8,391.5m at 31 March 2026 (2024–25: £7,449.7m; 2023–24: £6,787.6m), a ratio of net debt to regulatory capital value of 67%, and a total shareholder return for the regulated business of -4.7% for 2025–26. Note 32 of the accounts analyses the company's net debt a year earlier, at 31 March 2025, as £6,702.8m, comprising cash and cash equivalents of £557.0m, derivative financial instruments of £(1,488.0)m net, borrowings due within one year of £(365.0)m, borrowings due after one year of £(5,365.3)m, leases of £(41.7)m and smaller items for unamortised issue costs and gilt-lock proceeds. [src-059] - Analysis: The annual report gives two figures for the company's loss for the year ended 31 March 2026. Its key highlights show a loss for the financial year of £(112.6)m (2024–25: £(99.0)m; 2023–24: £(229.6)m). The audited income statement shows operating profit of £304.2m (2024–25: operating loss of £(17.4)m), net finance costs of £(445.3)m including fair-value losses on derivatives of £(138.4)m, a loss before taxation of £(139.4)m, a tax credit of £11.1m and a loss for the financial year of £(128.3)m (2024–25: £(99.0)m); the statement of changes in equity also uses £(128.3)m. Both figures appear in the same published report, which does not reconcile them; the audited primary statements use £(128.3)m. According to a press report of 28 July 2026, Southern Water accepted that the £112.6 million figure was wrong, the audited income statement putting the loss at £128.3 million. [src-059] [src-065] - Analysis: In assessing going concern, the directors of Southern Water Services Limited cite liquidity of £2,205.8 million at 31 March 2026 (2025: £629.0 million): cash on hand of £1,158.8 million (2025: £557.0 million), cash on deposit of £125.0 million (2025: nil), committed undrawn bank facilities of £422.0 million (2025: £72.0 million) and a committed undrawn bond backstop facility of £500 million. The financial statements were approved by the board and authorised for issue on 15 July 2026 and signed on its behalf by Stuart Ledger, Chief Financial Officer; the statement of changes in equity shows no equity dividends paid in 2024–25 or 2025–26. Deloitte LLP, the company's statutory auditor, signed its report on the 2025–26 financial statements on the same day, and the directors' report states that it will be re-appointed for the year ending March 2027. According to the supplementary prospectus of 30 July 2025, Deloitte audited the company's accounts without qualification for the year ended 31 March 2024, and without qualification but with an emphasis of matter on material uncertainty for the year ended 31 March 2023. [src-059] [src-017] - Analysis: A company-information aggregator, summarising the accounts for the year to 31 March 2026 filed on 10 September 2026, gives Southern Water Services Limited's turnover as £1.44B, cash in bank as £1.16B, total assets as £11.11B, total liabilities as £9.5B and net assets as £1.61B, with an employee count shown as 3K and a 'debt ratio' of 86%, and notes three outstanding charges. These are rounded figures from the aggregator's summary of the filed accounts, and the debt ratio is the aggregator's own measure. [src-028] ## Credit ratings - Analysis: The 2025–26 annual report describes Moody's rating of the Class A debt inconsistently. A ratings panel shows Standard & Poor's at BBB- (negative outlook), Fitch at BBB- (stable outlook) and Moody's at Ba1 (stable outlook), while the adjacent text says the Class A debt is currently rated BBB- stable by Fitch, Baa3 negative by Moody's and BBB- negative by S&P; the report adds that in November 2025 S&P removed its CreditWatch and placed the company on negative outlook. On Moody's scale Ba1 is below investment grade and Baa3 is the lowest investment-grade rating. The report states that the ratings on its panel are as at the date of publishing the accounts, which points to Ba1, and does not explain the adjacent text; the supplementary prospectus of July 2025 had given Moody's rating as Ba1 (stable). Deloitte's going-concern key audit matter in the same report states that one of the three ratings was already below investment grade. According to a press report of 28 July 2026, the company said that the correct Moody's rating was Ba1 with a stable outlook; the report added that the company's Annual Performance Report records Ba1 stable. [src-059] [src-065] - Analysis: On 28 July 2026, SW (Finance) I PLC's report states, Fitch Ratings upgraded the company's senior secured debt rating from BBB- to BBB with a stable outlook. The report says the upgrade reflected sustained equity support from Macquarie Asset Management and, latterly, Asterion Industrial Partners as announced on 22 June 2026, an ongoing operational turnaround, improved outcome delivery incentives and environmental performance, and an improved Competition and Markets Authority appeal outcome. [src-045] ## Equity totals since 2021 - Analysis: The sources total the equity put in since 2021 differently, and over different scopes. Asterion Industrial Partners, in a press release of 22 June 2026, said the new capital followed £900 million of equity committed during 2025 and would complete the £1.2 billion package announced in July 2025, and that with the over £1.65 billion invested since Macquarie Asset Management's initial acquisition in 2021, total equity investment in Southern Water stood at more than £2.8 billion; it also said more than £1.1 billion had been invested in the first year of the 2025–2030 regulatory period. Southern Water's 2025–26 annual report states that MAM-managed funds invested over £1.6 billion into the group between 2021 and 2023 and that total investment into the group since 2021 was over £2.5 billion after the £900 million of 2025–26, before the further £300 million commitment. [src-048] [src-059] - Analysis: A press report of the same day stated that a consortium led by Macquarie Asset Management was providing an additional £300 million of equity to Southern Water, which the report said came from funds managed by Asterion Industrial Partners, and that this would bring total equity investment in Southern Water by funds managed by Macquarie Asset Management and co-investors since the acquisition to more than £2.8 billion. The report also said that Southern Water's debt had been reported at about £9 billion as of July 2025, a figure it attributes to another news organisation and not one from the company's accounts, and that in March 2026 Southern Water was among five UK water companies not allowed to raise bills by as much as they had requested following a Competition and Markets Authority decision. Ofwat's consultation of September 2026 states that, after the European Commission cleared the acquisition in July 2026, the transaction completed in August 2026 with Asterion taking a 20% minority shareholding in the group, and that the £300 million equity commitment is expected to be drawn down in full on or around 31 March 2027. [src-095] [src-020] ## Sources - [src-045] Company statement source · src-045 - [src-091] Company statement source · src-091 - [src-089] Company statement source · src-089 - [src-039] Companies House register of charges: SOUTHERN WATER SERVICES LIMITED (02366670), Companies House - [src-104] Company statement source · src-104 - [src-066] Administrators' statement of proposals (AM03), Greensands (UK) Limited (06366235), Companies House - [src-017] Company statement source · src-017 - [src-115] Ofwat: New bonus rule blocks £4m in first year of operation, Ofwat, 2025-11-05 - [src-059] Company statement source · src-059 - [src-065] Media source · src-065 - [src-028] Corporate registry source · src-028 - [src-048] Company statement source · src-048 - [src-095] Media source · src-095 - [src-020] Ofwat consultation on the change of ownership for Southern Water Services Limited (September 2026), Ofwat, 2026-09