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Veolia credit rating downgraded by Moody's

Waste firm Veolia has been downgraded by a credit ratings agency.

Moody’s downgraded Veolia Environment’s senior unsecured ratings from A3 to Baa1.

The French multinational owns UK subsidiary Veolia Environmental Services.

Neil Bisset, Moody’s senior vice president and lead analyst for Veolia, said: “Today’s rating action reflects increased pressure on Veolia’s earnings and cash flows from a combination of a weak operating environment, the costs of restructuring the group and its commitment to a dividend payout of EUR 0.70 per share in 2012 and 2013.

“We therefore consider it unlikely that Veolia’s financial flexibility will match its current guidance for an A3 rating,” he said.

“The Baa1 rating also factors in the likely evolution of Veolia as it carries out its new strategic plan, which in our view will lead to a gradual rise in its business risk, as well as the targeted reduction in the group’s financial leverage.”

The troubled firm announced in December a divestment programme to sell off £4.3bn of assets and slash its debts by £2.5bn. The company has issued a series of profit warnings and in November had its credit rating downgraded by Fitch.

Moody’s has affirmed Veolia’s Prime-2 (P-2) senior unsecured rating, which was not on review.

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