Abengoa Said to Raise $318 Mln in First Spanish Solar Bonds

  • Bond offering `does not mean Abengoa is back in favor'
  • Abengoa's shares have plunged 64% in past six months

Abengoa SA, the Spanish renewable energy company that’s lost almost two-thirds of its market value in the past six months, completed the first bond offering in Spain for a clean power project, according to two people familiar with the deal.

Abengoa raised 285 million euros ($318 million) to refinance its Solaben Electricidad 1 and Solaben Electricidad 6 solar-thermal power plants, according to the people, who asked not to be identified because they’re not authorized to discuss the deal. The Seville, Spain-based company priced the deal Sept. 25 and it settled Wednesday, before its Abengoa Yield holding company acquired the facilities.

Abengoa’s shares have slumped this year as it struggles to shore up its balance sheet. Completing this deal is more a sign of investors’ interest in this type of bond, which is backed by a steady stream of long-term revenue, than in a renewed sense of confidence in the company. 

“The success of the Solaben issue does not mean that Abengoa is back in favor with the financial markets,” said Maxime Kogge, a credit analyst at Spread Research in Lyon, France.

Spain is seeking to tap into a growing appetite for project bonds, in part to reduce pressure on domestic banks that struggled through the European banking crisis. Institutional investors such as insurance companies are keen to match their liabilities with the predictable, long-term returns offered by infrastructure bonds. That helped investors overcome concern with Abengoa.

Capital Markets

Abengoa’s Class B shares rose 1.45 percent to 84 cents on the euro at 9:46 a.m. in Madrid trading.

“There’s a movement toward the capital markets,” said Charles Poole-Warren, a Madrid-based partner at the law firm Allen & Overy LLP, who didn’t work on the Solaben deal. “It’s a trend that is happening, and will continue to happen.”

The Solaben bonds mature in about 19 years and have a coupon of 3.758 percent. Citigroup Inc., Credit Agricole SA and Banco Santander SA led the deal, according to the people who were familiar with the deal. Standard & Poor’s rated the bonds BBB in July, two levels above junk.

Solar Thermal

The Solaben 1 and Solaben 6 plants each have 50 megawatts of capacity and began operations in Spain’s Extremadura region in 2013. They use parabolic trough technology -- curved mirrors that focus sunlight to heat tubes filled with a fluid that drives a turbine to produce electricity.

The Solaben offering is the third in Spain to finance specific infrastructure projects and the first for a clean-energy plant, said Gonzalo Cantabrana Fernandez, an analyst at Standard & Poor’s in Madrid.

These type of non-recourse notes are typically secured by underlying assets, a model that’s more common elsewhere in western Europe and North America.

That format helped Abengoa complete the deal because the debt isn’t linked to its own credit risk. The company has struggled to calm investors after announcing Aug. 3. plans to raise 650 million euros, just days after saying free cash-flow this year will be as much as 800 million euros lower than previously forecast. Chairman Felipe Benjumea said Sept. 24 that he would step down after 25 years.

Abengoa spokespeople didn’t immediately comment on the issuance.

“Solaben bondholders primarily watch the merits of the project, and the quality of the sponsor is a secondary element,” Kogge said.

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