Sept. 13 (Bloomberg) -- Abengoa SA, the Seville-based engineering company that designs and builds solar-thermal power generators, was graded junk by ratings agencies in their first assessment of its debt.
Moody’s Investor Service rated the company at Ba3, three levels below investment grade, while Fitch Ratings put the company at BB, two steps below its cut-off point for investors such as pension funds which seek less risky assets, the company said in a regulatory filing today. Both ratings were given a stable outlook.
Abengoa is ramping investment to fuel growth in biofuels, solar power and engineering services outside of its home market as the Spanish economy struggles to shrug off the worst recession in 60 years. The company’s net debt may rise by as much as 1.1 billion euros ($1.4 billion) in the second half of the year, Chief Financial Officer Amando Sanchez Falcon said on an Aug. 31 conference call.
“Fitch views Abengoa’s business as highly reliant on continued government and regulatory support for renewable energy sources,” Josef Pospisil, a director in Fitch’s energy, utilities and regulation team, said in a press release.
Abengoa reported a 37 percent increase in sales to 2.79 billion euros in the first half as revenue from the U.S. and Latin America surged. Sales from overseas markets accounted for 68 percent of the total in the first six months of the year. Net income fell to 100.4 million euros from 110.8 million euros after Abengoa hired additional workers.
“We will be alert to opportunities for financing our future growth,” Falcon said in a telephone interview today. “There aren’t many companies in our sector that have a public rating and our capacity to tap the markets sets us apart.”
Abengoa has no “immediate” plans to sell bonds, he added.
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