30/09/09
Water UK has published the results of an Indepen survey of investor views on Ofwat’s draft price determinations – and the verdict isn’t positive.
The views of equity and debt investors differ significantly: almost all equity investors had a negative overall view, and all said Ofwat's draft determinations had been tougher than they expected; the views of debt investors were more mixed.
More than half of debt and equity investors believed that there was a predetermined outcome of flat prices, which had led Ofwat to be too tough.
Many equity investors doubted whether, looking at the draft determinations as a package, companies would be able to earn their cost of capital; for a large majority of equity investors, the sector had become less attractive as a result.
These findings underline concerns that the draft determinations are a false economy that will reduce investor confidence in the financial stability of the water sector, leading to higher prices in the medium term.
Investor Survey: Ofwat's PR09 Draft Determinations (September 2009)
Contact: Rob Wesley
