Moody's rates Abengoa bonds B2

Moody's Investors Service said it assigned a B2 (LGD3) rating to the €375 million senior notes to be issued by Abengoa Finance SAU and guaranteed by Abengoa SA. Concurrently, Moody's assigned a definitive B2 rating to Abengoa Greenfield, SA's senior notes due 2019. Abengoa's B2 corporate family rating with a stable outlook remains unchanged.

Proceeds will be used to repay the €500 million senior notes due in March 2016 at or prior to maturity.

The agency said Abengoa's B2 ratings are constrained by its high leverage (at the corporate level, the ratio of debt to EBITDA is estimated to be 7.5x as of December), the group's very high complexity, a missing track record of positive free cash flow at the corporate level; constant refinancing needs requiring continued access to capital markets, the technical challenges the E&C segment faces to complete advanced installations on time and on budget and the company's need for continued regulatory support or stability with regards to solar energy generation or power transmission activities in all markets.

In Moody’s view, these challenges are partially offset by Abengoa's substantial scale, the group's order backlog of €8.6 billion as of March, potential for positive free cash flow at the corporate level supported by a substantial asset base of concessions in operation and under construction with a relatively high intrinsic value and Abengoa's good track record of project execution.

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