Around MXN 2 billion in rated debt instruments affected
Mexico, December 09, 2015 -- Moody's de México has today downgraded the issuer rating assigned
to Abengoa México, S.A. de C.V.
to C from Caa2. At the same time, Moody's affirmed
the NP and MX-4 ratings assigned to the company's commercial
paper program.
..Issuer: Abengoa Mexico, S.A.
de C.V.
Downgrades:
.... Issuer Rating, Downgraded to C
from Caa2
.... Issuer Rating, Downgraded to C.mx
from Caa2.mx
Affirmations:
....Senior Unsecured Commercial Paper,
Affirmed NP
....Senior Unsecured Commercial Paper,
Affirmed MX-4
Outlook Actions:
....Outlook, Changed To No Outlook From
Negative
RATINGS RATIONALE
The downgrade was prompted by the announcement made by Abengoa Mexico
on December 3, 2015 about missed payments of principal and coupons
under certain issuances of its commercial paper program of which MXN 2.1
billion are currently outstanding. Under the underlying indentures,
the missed payments constitute an event of default if not cured in a 5-day
period and trigger the anticipated amortization of all debt outstanding
under the program.
Considering that the missed payments refer to a modest amount of around
MXN 267 million (USD 15.8 million), Abengoa Mexico's
inability to service them reflects the lack of access of the Mexican subsidiary
to its surplus in the centralized treasury controlled by its parent company,
Abengoa S.A. (Caa2, negative) in Spain. As
of the end of September 2015, Abengoa Mexico's net position in the
group's centralized treasury was of MXN 7.4 billion.
For the same period, cash on hand was MXN 103 million.
Abengoa S.A. is currently facing severe liquidity restrictions.
On November 25, 2015, Abengoa S.A. announced
the cancellation of the expected equity injection expected from Gonvarri
Corporacion Financiera (Gonvarri), given its consideration that
the condition of a substantial financial package was unfulfilled.
The company also announced that it made a formal filing under article
5 bis of the Spanish Insolvency Law (Ley Concursal), which though
not a default in itself, reflects the precarious liquidity absent
the equity raising and may be a likely precursor to a formal restructuring
proceeding. For further detail on the rating action on Abengoa
S.A., please refer to moodys.com.
Without the access to the group's centralized treasury, we
estimate that recovery for senior unsecured creditors will be very low
and in line with the C rating assigned. Moreover, further
pressuring recovery prospects is the fact that Abengoa Mexico is one of
the subsidiaries guaranteeing a large portion of the group's debt.
As of the end of 2014, Abengoa S.A. estimated that
the group of guarantors accounted for around 75% of consolidated
EBITDA. We estimate guaranteed debt as of the end of 2014 at around
EUR 3.8 billion. We do not adjust Abengoa Mexico's leverage
to account for guaranteed debt as the subsidiary is only a small contributor
to the guarantor group. However, these instruments rank at
the same level as Abengoa Mexico's commercial papers, which
recovery prospects are therefore very low under a liquidation scenario.
A ratings upgrade is not envisioned in the short run, longer term,
a positive rating action will require a substantial improvement in the
company's liquidity position. Given the linkage between Abengoa
Mexico and its parent company, a positive rating action for Abengoa
Mexico would also require material improvements in Abengoa S.A.
credit profile.
The C rating assigned is the lowest rating that can be assigned by Moody's.
Headquartered in Mexico City, Abengoa Mexico is a fully owned subsidiary
of Abengoa S.A. (Caa2, negative outlook). The
company was founded in 1981 to conduct Abengoa S.A.'s business
in Mexico. The company is well integrated into its parent's operation,
with its main activity being the engineering & construction (E&C)
of projects related with the energy industry. For the last twelve
months (LTM) ended in September 30, 2015, Abengoa Mexico's
revenue and Moody's-adjusted EBITDA margin were USD 254 million
and 24.7% respectively.
The principal methodology used in these ratings was Construction Industry
published in November 2014. Please see the Credit Policy page on
www.moodys.com.mx for a copy of this methodology.
The period of time covered in the financial information used to determine
Abengoa Mexico, S.A. de C.V.'s rating
is between 1/1/2012 and 9/30/2015 (source: Audited Financial Statements
and quarterly reports filed with BMV).
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn"
country modifier signifying the relevant country, as in ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in June 2014 entitled "Mapping Moody's National
Scale Ratings to Global Scale Ratings".
REGULATORY DISCLOSURES
Information sources used to prepare the rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's information.
The ratings have been disclosed to the rated entity prior to public dissemination.
A general listing of the sources of information used in the rating process,
and the structure and voting process for the rating committees responsible
for the assignment and monitoring of ratings can be found in the Disclosure
tab in www.moodys.com.mx.
The date of the last Credit Rating Action was 27/11/2015.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.mx.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
This Rating is subject to upgrade or downgrade based on future changes
in the financial condition of the Issuer/Security, and said modifications
will be made without Moody's de México S.A. de C.V
accepting any liability as a result.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's considers the quality of information available on the rated entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not an auditor
and cannot in every instance independently verify or validate information
received in the rating process.
Please see Moody's Rating Symbols and Definitions on www.moodys.com.mx
for further information on the meaning of each rating category and the
definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com.mx
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is the most
reliable and accurate based on the information that is available to it.
Please see our website www.moodys.com.mx for further
information.
Please see www.moodys.com.mx for any updates on changes
to the lead rating analyst and to the Moody's legal entity that has issued
the rating.
The ratings issued by Moody's de Mexico are opinions regarding the credit
quality of securities and/or their issuers and not a recommendation to
invest in any such security and/or issuer.
Please see the ratings tab on the issuer/entity page on www.moodys.com.mx
for additional regulatory disclosures for each credit rating.
Sandra Beltran
Asst Vice President - Analyst
Corporate Finance Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Marianna Waltz, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300
Releasing Office:
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Moody's downgrades Abengoa Mexico's ratings to C
