London | Ratings agency Moody’s has downgraded Macquarie’s deeply indebted UK water company, Southern Water, to junk status, piling further pressure on one of the asset manager’s most challenging European investments.

Moody’s cut Southern Water’s credit rating from Baa3 to Ba1 and kept it on review for downgrade, as part of a sweeping negative reappraisal of the British water sector. Fellow ratings agency S&P has already cut its rating on Southern Water from BBB to BBB-, one notch above junk, and kept the utility on watch “with negative implications”.