Fitch Affirms Umgeni Water at 'AA+(zaf)'; Outlook Stable
Fitch Ratings-London/Johannesburg-16 October 2009: Fitch Ratings has today affirmed Umgeni Water's (Umgeni) National Long-term and senior unsecured ratings at 'AA+(zaf)' respectively. The Outlook for the Long-term rating is Stable. The agency has affirmed the South African state-owned bulk water utility's National Short-term rating at 'F1+(zaf)'.
The ratings are supported by the high level of support Fitch believes Umgeni would receive from the South African government in the event of financial distress, in line with Fitch's assessment of the essential and critical nature of the water sector in South Africa.
The ratings also reflect Umgeni's sustained financial improvement over the last four years, most notably an improvement in adjusted leverage, measured as adjusted net debt/operating EBITDAR, to 0.9x at FYE09, from 1.6x at FYE08. Fitch notes that Umgeni will be entering a high capex phase over the medium term, but the agency believes that ongoing strong cash flows will limit the need to incur significant additional funding during this period.
Umgeni is the country's second-largest water utility, based in the province of KwaZulu-Natal. Its largest customer is eThekwini metro (greater Durban municipality), which accounts for 78% of total revenue.
Contacts: Roelof Steenekamp, Johannesburg, Tel: +27 11 380 0900; Karabo Matentji: +27 11 380 0910.
Media Relations: Peter Fitzpatrick, London, Tel: + 44 (0)20 7417 4364, Email: peter.fitzpatrick@fitchratings.com.
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(zaf)' for National ratings in South Africa. Specific letter grades are not therefore internationally comparable.
Additional information is available at www.fitchratings.com.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
101 Finsbury Pavement, London, EC2A 1RS