Downgrade doomsday: utilities fear swap dealer shortage
Tough ratings criteria for utility securitisations mean they could be left short of swap counterparties. Utilities are worried they could face downgrades as a result – and potentially be stripped of their licences. Matt Cameron reports
UK utilities could see their financing costs increase and, in a worst-case scenario, lose their government-approved licences, if a Moody’s Investors Service review of ratings for 17 global dealers turns out to be be the precursor to a series of downgrades. That might seem odd, but the crisis years have not been kind to the financial system’s hidden links and interdependencies – this is just the latest to be exposed. Moody’s is expected to announce its decision in mid-May.
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