Frankfurt am Main, June 27, 2012 -- Moody's Investors Service (Moody's) today placed Abengoa's ratings under review for downgrade. The ratings affected by this review are the company's corporate family rating ("CFR", currently Ba3), its probability of default rating ("PDR", currently Ba3), and the senior unsecured notes ratings (currently Ba3).

RATINGS RATIONALE

Moody's review of Abengoa's ratings follows the recent downgrades of Spain's government bond rating (to Baa3 on review from A3), of the ratings for certain Spanish utilities and of 28 Spanish banks. While Abengoa's Spanish operations are relatively small in terms of contribution to the group's revenues, the sovereign downgrade is a credit-negative development for Abengoa in light of the multiple channels of contagion that exist between sovereign and corporate issuers domiciled in that country. These channels of contagion include contracting economic activity in light of the government's austerity measures, and more importantly for Abengoa, possible further cuts to regulatory support for renewable energies, and liquidity constraints and higher financing costs resulting from diminished investor confidence and credit availability. This also takes into account the company's relatively high leverage -- if measured at group level including debt and EBITDA from non-recourse projects -- with net debt/EBITDA of 6.2x including Moody's adjustments and at the company level with net debt/EBITDA of 2.4x as reported. High leverage in combination with some dependency on the Spanish markets could lead to a more difficult market access for Abengoa which may put pressure on the refinancing of its EUR200 million convertible bonds maturing in July 2014 or the EUR300 million ordinary bonds due February 2015.

Abengoa is domiciled in Spain, generates about 30% of revenues in that country, constructs and operates more than one third of its, mostly solar energy, concessions in Spain and, apart from bonds issued, Abengoa is funded primarily by Spanish banks. Hence, its future performance and financial flexibility will be materially impacted by (i) industrial activity and power consumption in Spain, (ii) the willingness and capacity of the Spanish state and national utilities to continue supporting renewable energies of which concentrated solar power is one of the more expensive sources, (iii) revisions to the tax regime, as the recent cap to the tax effectiveness of financing cost at 30% EBITDA, (iv) continued availability of bank funding for Abengoa's corporate activities and concession projects, and (v) the development of advance payments, a funding source that correlates with order inflow. All its Spanish concessions are in operation or filed in the pre-registry for new projects and are covered by long term contracts. In May 2012, Abengoa has extended its EUR1.6 billion credit facility to mature between 2014 and 2016 and as a point of strategy, will enter into concession projects only once limited recourse funding has been secured. Nevertheless, the medium-term refinancing of such maturities may be less certain and more expensive than in the past.

Moody's review will thus focus on Abengoa's options to respond to potential (i) declines in domestic demand, (ii) cuts in feed-in tariffs or power quotas, (iii) increases in tax rates or abolishment of exemptions, (iv) constraints in access to bank or capital market funding, (v) future prospects to reduce leverage, and (vi) expected development of net working capital and prepayments.

WHAT COULD MOVE THE RATING UP/DOWN

In view of the rating review for possible downgrade, Moody's does not currently anticipate upward rating pressure. The Ba3 ratings for Abengoa could be confirmed, if Moody's concluded that (i) Abengoa's business volumes and profitability should be resilient to weakness in Spain and to revisions of the regulatory and tax regime and (ii) its financial flexibility is viewed as robust. A near-term path to a group net debt/EBITDA level well below 6.0times (6.2times with Moody's adjustments for 2011) should be clear.

A downgrade would be triggered by vulnerability to the deteriorating economic climate in Spain and/or concerns about medium-term access to funds for its extensive investments program.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Heavy Manufacturing Rating Methodology published in November 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Abengoa S.A. is a vertically integrated environment and energy group whose activities span from engineering & construction and utility type operation (via concessions) of solar energy plants, electricity transmission networks and water treatment plants to industrial production activities like biofuels and metal recycling. Headquartered in Seville, Spain, Abengoa generated EUR7.1 billion revenues in 2011, out of which 73% came from outside Spain.

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