Key Takeaway: Moody's downgraded Southern Water to junk status , citing financial and operational underperformance, compounding the broader issues facing the UK water sector. Southern Water Ltd’s credit rating was downgraded to junk by Moody’s , with a warning of potential further cuts due to its weak performance history and financial challenges. This downgrade impacts the company’s ability to raise the £4 billion in new debt and £650 million in equity required for its capital plans. The UK water industry is facing heightened scrutiny due to concerns over chronic leaks, sewage spills, and high-interest rates. Southern Water, which supplies over two million people in England, could face severe penalties from the regulator Ofwat , which may limit funds for essential upgrades. Following the downgrade, Southern Water’s 2026 bonds dropped 2.7 pence to around 85 pence on the pound. Despite the rating cut, Southern Water assured customers that services would continue unaffected, hig
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China’s central bank moved to shore up the yuan for the second consecutive day by setting a stronger-than-expected reference rate of 7.1966 per dollar, beating analyst estimates by 359 pips. This follows an even wider gap of 445 pips on Wednesday, the largest since August.
The yuan is under pressure as the US dollar reaches a two-year high after Donald Trump’s election victory, fueled by concerns that his administration might impose 60% tariffs on Chinese goods, which would impact Sino-US trade significantly.
Previously, the People’s Bank of China (PBOC) had allowed the yuan to weaken alongside other currencies, but more than half of Bloomberg’s survey respondents suggested that Beijing might further devalue the yuan to boost Chinese export competitiveness amidst potential trade barriers.
The PBOC’s daily yuan fixing—a tool that controls the onshore yuan’s movement within a 2% range—remains a key measure for managing currency stability. According to Kiyong Seong, Asia macro strategist at Societe Generale, it’s likely that the PBOC is focusing on controlling the pace of devaluation rather than defending a specific level.
The offshore yuan briefly gained 0.1% after the fixing but remained steady around 7.2485 per dollar, marking a 1.8% decline for the month so far.
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