Frankfurt am Main, July 17, 2012 -- Moody's Investors Service has today downgraded Abengoa S.A.'s corporate family rating (CFR) and probability of default rating (PDR) to B1 from Ba3. Concurrently, Moody's has also downgraded the rating on the group's senior unsecured notes to B1 from Ba3, with a loss given default assessment of 3 (LGD3, 47%). The outlook on the ratings is stable. The action concludes the rating review initiated by Moody's on 27 June 2012. For a full list of affected ratings, please see below.

RATINGS RATIONALE

"Today's rating action reflects that, as a result of Abengoa's heavy investment programme, we no longer expect the group to be able to reduce its group net leverage, measured as net debt/EBITDA, to below 6.0x, which was one of the key criteria for the previous rating, but rather expect that it will increase from the level of 6.2x that was achieved in 2011," says Wolfgang Draack, a Moody's Senior Vice President and lead analyst for Abengoa.

Abengoa's high leverage and its reliance on Spanish banks make the group vulnerable to potential constraints in access to bank or capital market funding. In addition, the group faces challenges in its operating environment in Spain, which may extend to some of its other core markets. Such challenges may include (1) contracting economic activity in the country in light of the government's austerity measures; (2) tax increases; and, more importantly for Abengoa, (3) reductions in regulatory support as currently contemplated for renewable energies in Spain. In addition, there is an increasing reliance on the project execution of two large concentrated solar power projects in the US, with committed investment totaling around EUR2.6 billion and thus accounting for about 30% of Abengoa total committed capex plan including third party funding.

Abengoa is domiciled in Spain, where it generates approximately 30% of its revenues and constructs and operates around one third (by investment) of its concessions, which are mostly in the concentrated solar power (CSP) industry. Apart from bonds issued, the group is funded primarily by Spanish banks. Abengoa's business activity in Spain is supported by the 24-month order backlog of its Engineering and Construction (E&C) segment and by the group's long-term contracts with the domestic oil companies for take-up of bioethanol. Moody's notes that all Abengoa's Spanish concessions are in operation or filed in the Goverment's pre-registry for new projects, covered by committed feed-in tariffs, and funded with limited recourse financing. They account for about 2.5% of revenues currently and an estimated 4.5% once all have come on-stream. If the Spanish government were to implement its current plans to levy a substantial tax on renewable energy generation, the 13 solar projects in operation or construction in the country, and consequently Abengoa's group cash flow, would suffer, but with a natural cap due to ring-fencing of funding.

With regard to financial flexibility, Moody's notes that Abengoa holds more than EUR2.8 billion in cash and cash equivalents and another almost EUR800 million in short-term financial investments on the balance sheet. In addition, the group has recently extended its syndicated credit facility to 2014-2016 and arranged committed project financing for all of its concession projects, but it still faces annual debt refinancing needs of between EUR600 million and EUR1.2 billion between 2013 and 2016.

Under its committed capital expenditure (capex) plan, Abengoa expects to invest approximately EUR3.0 billion on a consolidated basis before the end of 2013. Abengoa will inject equity of EUR833 million (27%) into these projects, with the remainder to be funded by committed project finance and equity contributions from partners. The clear majority will be spent on concentrated solar power plants and the group's two solar projects in the USA alone account for more than half of the investment volume. The US installations are benchmark projects on an unprecedented scale and complexity for Abengoa. Even if Abengoa's EBITDA continues to experience double-digit growth in percentage terms, the group's high capex is likely to push group (including the consolidated concessions) leverage net of cash well above 6.0x, a level that is more commensurate with the B1 rating category. This level already recognises the limited-recourse nature of more than half of Abengoa's debt and the contractual nature of cash flows from its concessions; pure industrial companies would be unlikely to achieve the B1 rating if they had a similar level of net leverage.

The stable outlook on the ratings reflects Moody's expectation that Abengoa will be able to (1) mitigate any charges imposed on its concession activities by cutting costs or burden sharing with lenders; (2) maintain a reported non-concession EBITDA margin in the double-digit range in percentage terms (12.1% in 2011); and (3) secure access to funding by exploring additional programmes of public development banks as well as by extending its committed credit facilities early, while maintaining comfortable headroom under its financial covenants.

LIST OF RATINGS AFFECTED Issuer: Abengoa S.A. Downgrades: - Corporate family rating, downgraded to B1 from Ba3

- Probability of default rating, downgraded to B1 from Ba3

- Senior unsecured regular bond/debenture, downgraded to B1 from Ba3

Outlook Actions:

- Outlook changed to stable from rating on review

Issuer: Abengoa Finance, S.A.U.,

Downgrades:

- Senior unsecured regular bond/debenture, downgraded to B1 from Ba3

Outlook Actions:

- Outlook changed to stable from rating on review

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's would consider a further rating downgrade if Abengoa's earnings strength were to deteriorate as a result of poor project execution or changes in the operating environment, such as reductions in regulatory support for renewable energies without a mitigating reduction in Abengoa's debt level. Such a deterioration would be reflected by (1) an increase in Abengoa's leverage, leading to reported net debt/EBITDA based on the corporate debt rising materially above 3.0x, thereby exerting pressure on the group's ability to comply with covenants; or (2) Moody's-adjusted net debt/EBITDA moving towards 7.0x for the group. In such a consideration, Moody's will take account of the quality of investments, Abengoa's financial strategy and the state of maturity of the concession portfolio.

Conversely, to consider a rating upgrade, Moody's would require evidence of (1) resilience to economic pressures and cuts in regulatory support in its core markets, (2) Moody's-adjusted net debt/EBITDA falling below 6.0x for the group as a whole, and (3) the reported net debt/EBITDA of Abengoa's corporate activities sustained materially below 3.0x

PRINCIPAL METHODOLOGY

The methodologies used in these ratings were Global Heavy Manufacturing Rating Methodology published in November 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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

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Wolfgang Draack Senior Vice President Corporate Finance Group Moody'sDeutschland GmbH An der Welle 5 Frankfurt am Main 60322 Germany JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Matthias Hellstern Associate Managing Director Corporate Finance Group Releasing Office: Moody's Deutschland GmbH An der Welle 5 Frankfurt am Main 60322 Germany JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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