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Moody’s cut the credit rating of Britain’s Thames Water on Friday and warned it could do so again if the sector’s regulator took further action against the firm and it struggled to improve its finances.

Moody’s said it downgraded Thames Water to B2 from B1 and maintained a negative outlook.

The ratings firm added the cut reflected the risk that Britain’s water regulator Ofwat could impose a “dividend block” on the company due to its finances and the increased public criticism for relentlessly dumping raw sewage into rivers.

That in turn would weigh on “lender appetite” in the context of forthcoming refinancings, “likely to the detriment of the availability and cost of capital” for Thames Water’s holding company.

Further equity injections by shareholders would also be subject to conditions and may fall short of what is needed to underpin the company’s credit quality, Moody’s added.

Thames Water was not immediately available for comment.

Large dividend payouts to shareholders – including £2.7-billion ($3.47-billion) Thames paid out to investors from 2006 to 2017 while its debt pile tripled to almost £11-billion – have stoked public anger.

Britain privatized its water industry in 1989, but near constant sewage releases dirtying rivers and beaches have shattered public confidence in the sector, and polls show a majority of people now support nationalization.

The chair of Ofwat, Iain Coucher, told a U.K. parliamentary committee this month that Thames Water’s problems needed fixing quickly, but for now it was unlikely to be put into a special administration regime, essentially temporary nationalization.

Thames had asked shareholders for an extra £1-billion to fund its turnaround. It is set to get only £750-million of it for now under a deal agreed this month, although they have also indicated further support of around £2.5-billion between April 2025 and 2030.

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