Moody's downgrades Abengoa's CFR to B2 due to weak biofuels prospects

Mar 21, 2013 - Moody's has downgraded the corporate family rating (CFR) of Spanish renewables and engineering group Abengoa (MCE:ABG) to B2 from B1, due to the continued weak prospects for the biofuels segment in Europe and the USA.

At the same time, Moody's revised down the probability of default rating (PDR) of Abengoa to B2-PD from B1-PD, but reviewed the outlook to "stable" from "negative", Moody's said in a statement yesterday.

The rating actions were attributed to Abengoa's high leverage in fiscal year 2012 as well as to weaker than previously expected earnings before interest, tax, depreciation and amortisation (EBITDA) generation of up to EUR 1.4 billion (USD 1.807bn) in 2013, due to the negative impact from the recent Spanish regulatory measures to address the tariff deficit.

The credit agency could downgrade Abengoa's rating further if liquidity profile worsens or if the company fails to reduce adjusted net consolidated debt/EBITDA to around 8.0x in the next 12 to 18 months.

On the other hand, credit ratings can be revised up if Abengoa reduces net corporate debt/EBITDA to 3.0x, gross corporate debt/EBITDA to below 5.5x and adjusted net debt/EBITDA to less than 7.0x.

Abengoa represents an environment and energy group whose activities range from engineering & construction and utility-type operation of solar energy plants, electricity transmission networks and water treatment plants to industrial production activities such as biofuels and metal recycling.

Credit rating agency website: www.moodys.com

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