DBRS Ratings GmbH (DBRS Morningstar) confirmed Acciona S.A.'s (Acciona or the Group) Issuer Rating at BBB, as well as its Short-Term Issuer Rating at R-2 (middle). Concurrently, DBRS Morningstar confirmed the rating on Acciona Financiación Filiales, S.A.'s Euro Medium Term Notes programme at BBB. All trends are Stable.
KEY RATING CONSIDERATIONS
Acciona’s ratings are largely based on Corporación Acciona Energías Renovables's (CAER) ratings and an internal assessment of the Group's Infrastructure Division, adjusted for structural subordination, leverage at the nonenergy business level, and potential mitigant factors. Over the forecast horizon to 2024, excluding the Group’s other activities, CAER is expected to account for approximately 80% of Acciona's aggregated EBITDA, with the remaining 20% mainly generated by the Group's Infrastructure Division.
The rating confirmations and Stable trends consider DBRS Morningstar's view that (1) Acciona retains a substantial ownership in CAER (currently rated BBB (high) with a Stable trend), is committed not to lower its stake to below 70% (currently 82.663%), and continues to benefit from substantial EBITDA and cash flow contributions from CAER after the initial public offering; (2) the credit quality of the Group's Infrastructure Division, in particular, construction activities, is weaker than the Group’s regulated and nonregulated generation businesses and a limiting/pressuring factor on the Group's ratings; (3) credit metrics at Acciona remain solid and continue to support the BBB ratings; (4) although a material amount of debt has been transferred to and will be issued by CAER, Acciona's ratings are confirmed at one notch lower than CAER's ratings, reflecting the structural subordination of Acciona's debt compared with CAER's debt; (5) the ratio of Acciona's modified nonconsolidated debt with respect to its modified nonconsolidated capital structure will decrease to the 20% to 30% level over the forecast horizon, not requiring further negative adjustments; and (6) the liquidity position of the Group is considered to be moderately positive, with Acciona having cash and cash equivalents of approximately EUR 2.9 billion as of 30 June 2022, availability under its banking lines, and access to the debt and equity capital markets.
Given Acciona’s current capital expenditure plan, project development risk, and financing strategy at the CAER level, as well as the weaknesses generated in the Infrastructure Division by the current supply chain disruptions and inflationary pressure, a positive rating action in the medium term is considered very unlikely. On the other hand, a negative rating action could occur as consequence of (1) a change in business mix that materially increases the EBITDA contribution from the Group’s construction activities; (2) a slower-than-expected recovery in the financial performance of nonenergy activities by 2024; (3) a change in CAER’s ownership to below the 70% level; (4) significant project delays and cost overruns associated with CAER’s aggressive expansion plan; (5) a material increase in CAER’s exposure to commodity risk; (6) a decline in credit metrics to below DBRS Morningstar’s required levels; or (7) a deterioration in the Group’s liquidity position, including reduced access to the bank, debt, and equity capital markets.
Acciona’s ratings are supported by the Group’s (1) stable cash flows from regulated generation assets in Spain; (2) long-term contracts for its international generation assets; (3) strong construction, operational, and technical expertise; (4) geographic and business diversification; (5) stable cash flow from service activities in water, concessions, and other services; (6) substantial infrastructure backlog for growth. Acciona’s ratings are constrained by the Group’s (1) capital expenditure intensity and project development risk; (2) exposure of nonregulated generation to price volatility in the long term; (3) exposure of construction activities to potential cost overruns and long lead times; (4) operational risk; (5) currency and interest risk; and (6) intense competition.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Environmental (E) Factors
As Acciona is a pure-play leader in the renewable energy sector through its subsidiary CAER, the Environmental factor “Carbon and GHG Costs” is considered to have a relevant effect, with a modestly positive impact on DBRS Morningstar’s overlay analysis.
Social (S) Factors
Given Acciona’s pivotal role in developing and managing key infrastructure assets, the Social factor “Product Governance” is considered to be a relevant factor for the analysis, although with no current impact on the Group’s current analysis.
Governance (G) Factors
There are no Governance (G) factors that had a significant or relevant effect on the credit analysis.
Rating actions on CAER are likely to have an impact on this rating. ESG factors that have a significant or relevant effect on the credit analysis of Acciona S.A. are also discussed separately at https://www.dbrsmorningstar.com/issuers/17693/acciona-sa.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.
DBRS Morningstar notes that this press release was amended on 31 March 2023 to include the analytical titles in the disclosures section.
All figures are in euros unless otherwise noted.
The principal methodologies are Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry (24 September 2021); Rating Companies in the Independent Power Producer Industry (18 May 2022); and Rating Companies in the Construction and Property Development Industry (19 November 2021) which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships (29 October 2021); DBRS Morningstar Criteria: Guarantees and Other Forms of Support (4 April 2022); and DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (17 May 2022; https://www.dbrsmorningstar.com/research/396929).
The primary sources of information used for this rating include annual and quarterly reports and financial statements, management projections and budgets, and external correspondences. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.
DBRS Morningstar does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.
For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. DBRS Morningstar understands further information on DBRS Morningstar historical default rates may be published by the Financial Conduct Authority (FCA) on its webpage: https://www.fca.org.uk/firms/credit-rating-agencies.
The sensitivity analysis of the relevant key rating assumptions can be found at: https://www.dbrsmorningstar.com/research/402252/acciona-sa-and-acciona-financiacion-filiales-sa-sensitivity-analysis.
This rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.
Lead Analyst: Giuseppe Fresta, Senior Vice President
Rating Committee Chair: Andrew Lin, Managing Director
Initial Rating Date: 23 April 2020
Last Rating Date: 8 October 2021
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-- Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry (24 September 2021), https://www.dbrsmorningstar.com/research/384922.
-- Rating Companies in the Independent Power Producer Industry (18 May 2022), https://www.dbrsmorningstar.com/research/396971.
-- Rating Companies in the Construction and Property Development Industry (19 November 2021), https://www.dbrsmorningstar.com/research/388476.
-- DBRS Morningstar Criteria: Guarantees and Other Forms of Support (4 April 2022), https://www.dbrsmorningstar.com/research/394683.
-- DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships (29 October 2021), https://www.dbrsmorningstar.com/research/386615.
-- DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (17 May 2022), https://www.dbrsmorningstar.com/research/396929).
Information regarding DBRS Morningstar ratings, including definitions, policies, and methodologies, is available on www.dbrsmorningstar.com.