DBRS Ratings GmbH (DBRS Morningstar) confirmed both the Issuer Rating and the Short-Term Issuer Rating on Acciona, S.A. (the Company) at BBB and R-2 (middle), respectively. DBRS Morningstar also confirmed its rating on Acciona Financiación Filiales, S.A.'s existing Euro Medium Term Notes programme at BBB. The trends on all ratings remain Stable.
KEY CREDIT RATING CONSIDERATIONS
Acciona’s ratings are largely based on Corporación Acciona Energías Renovables's (CAER) ratings and on a rating assessment of the Acciona's Infrastructure Division, adjusted for structural subordination, leverage at the nonenergy business level, and potential mitigant factors. Over the forecast horizon to 2025, excluding the Company’s other activities, CAER is expected to account for approximately 75% of Acciona's aggregated EBITDA, with the remaining 25% mainly generated by the Infrastructure Division.
The rating confirmations and Stable trends consider DBRS Morningstar’s view that: (1) Acciona retains a 82.632% ownership in CAER (currently rated BBB (high) with a Stable Trend), and is committed not to lower its stake in CAER to below 70%, (2) continues to benefit from substantial EBITDA and cash flow contributions from CAER post-IPO; (3) the credit quality of the Group's Infrastructure Division, in particular construction activities, is weaker than the Group’s regulated and non-regulated generation businesses and limits the Group's ratings; (4) credit metrics at Acciona remain solid and continue to support the BBB ratings; (4) Acciona's ratings are one notch lower than CAER's ratings and reflect structural subordination of Acciona's debt compared with CAER's debt; (5) the ratio of Acciona's modified non-consolidated debt with respect to its modified non-consolidated capital structure will decrease to the 20-30% 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 3.1 billion as of 30 June 2023, availability under its banking lines (EUR 3.6 billion as of June 23), and access to the debt and equity capital markets.
CREDIT RATING DRIVERS
Given Acciona’s current capital expenditure plan, project development risk, and financing strategy at the CAER level, as well as the inflationary pressure and the operational risk in the Infrastructure Division, a positive rating action in the medium term is considered very unlikely.
A negative rating action could occur as a consequence of (1) a change in business mix that materially increases the EBITDA contribution from the construction Division; (2) a slower-than-expected recovery in the financial performance of nonenergy activities by 2025; (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 decline in credit metrics to below DBRS Morningstar’s required levels; or (6) a deterioration in the Company’s liquidity position, including reduced access to the bank, debt, and equity capital markets.
CREDIT RATING RATIONALE
Acciona’s ratings are supported by the (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 Company’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 current analysis.
There was no Governance (G) factors that had a significant or relevant effect on the credit analysis.
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” (4 July 2023) at https://www.dbrsmorningstar.com/research/416784.
All figures are in euros unless otherwise noted.
DBRS Morningstar applied the following principal methodologies:
-- “Global Methodology for Rating Companies in the Construction and Property Development Industry” (24 November 2022), https://www.dbrsmorningstar.com/research/405710.
-- “Global Methodology for Rating Companies in the Independent Power Producer Industry” (9 May 2023), https://www.dbrsmorningstar.com/research/413646/.
-- “Global Methodology for Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry” (13 September 2022), https://www.dbrsmorningstar.com/research/402616.
The following methodologies have also been applied:
-- “DBRS Morningstar Global Criteria: Guarantees and Other Forms of Support” (28 March 2023), https://www.dbrsmorningstar.com/research/411694.
-- “DBRS Morningstar Global Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships” (26 October 2022), https://www.dbrsmorningstar.com/research/404334.
The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.
A description of how DBRS Morningstar analyses corporate finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/397223.
The primary sources of information used for these credit ratings include audited financial statements, quarterly results reports, management projections and budgets, and external correspondences. DBRS Morningstar considers the information available to it for the purposes of providing these credit ratings to be of satisfactory quality.
DBRS Morningstar does not audit the information it receives in connection with the credit 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 credit 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://registers.esma.europa.eu/cerep-publication. For further information on DBRS Morningstar historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.
The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://www.dbrsmorningstar.com/research/418961/acciona-sa-sensitivity-analysis-of-the-relevant-key-rating-assumptions.
These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom.
Lead Analyst: Giuseppe Fresta, Senior Vice President
Rating Committee Chair: Victor Vallance, Managing Director
Initial Rating Date: 26 August 2021 (CAER’s Issuer Rating), 3 September 2021 (CAER’s Short-Term Issuer Rating and Acciona Energía Financiación Filiales, S.A.'s Euro Medium Term Notes)
Last Rating Date: 26 August 2022 and 3 September 2022, respectively, as noted above
Information regarding DBRS Morningstar ratings, including definitions, policies, and methodologies, is available on www.dbrsmorningstar.com or contact us at email@example.com.
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