Morningstar DBRS Confirms Credit Ratings on Acciona, S.A. and Acciona Financiación Filiales, S.A. at BBB (low) With a Stable Trend

DBRS Ratings GmbH (Morningstar DBRS) confirmed its Issuer Rating and Short-Term Issuer Rating on Acciona S.A. (Acciona or the Group) at BBB (low) and R-2 (low), respectively. Morningstar DBRS also confirmed its credit rating on Acciona Financiación Filiales, S.A.'s existing Euro Medium Term Notes programme at BBB (low). The trends on all credit ratings are Stable.

KEY CREDIT RATING CONSIDERATIONS
The credit rating confirmations reflect the Group's solid performance in 2024 despite some delay in its asset rotation execution, which was already included in Morningstar DBRS' Base Case scenario. In the Group's Energy division, better-than-expected prices in the international markets and a slower growth strategy reduced the initially planned capital expenditures (capex) and prevented further debt build-up. The divesting of 801 megawatts between November 2024 and February 2025, which generated around EUR 1,300 million in proceeds, will further support a stable rating positioning. In the Group's Infrastructure division, the strong backlog at the end of 2024 of EUR 28.5 billion covering more than 3.3 years of activity, increasing concessional activity, and the improving EBITDA margin also contributed to the credit rating confirmation, even though we noticed a moderate and expected increase in debt/EBITDA. Consolidated credit metrics at the end of 2024 were above Morningstar DBRS' Base Case scenario, with cash flow-to-net debt at 23.5%, EBITDA-to-interest at 3.0 times, and net debt-to-capital at 53.4%.

The Stable trends reflect the recurrent cashflow generated by the regulated and contracted energy business, which limits merchant exposure; the strong Infrastructure backlog; the Group's ability to curb its growth plan in the medium term; Acciona's active asset rotation programme with further expected meaningful disposal proceeds in 2025; and management's commitment to an investment-grade credit rating.

Morningstar DBRS largely based Acciona's credit ratings on Corporación Acciona Energías Renovables' (Acciona Energía) credit ratings and our assessment of the Infrastructure division, adjusted for structural subordination and leverage at the nonenergy business level. Over the forecast horizon to 2027, excluding the Group's activities, Acciona Energía is expected to contribute around 60% and the Infrastructure business around 40% of total EBITDA.

The credit ratings consider Morningstar DBRS' view that: (1) Acciona retains a 88.33% ownership in Acciona Energía and is committed not to lower its stake to below 70%; (2) the Group continues to benefit from substantial EBITDA and cash flow contributions from Acciona Energía; (3) the credit quality of the Group's infrastructure division, although considered investment grade, is weaker than the Group's regulated and nonregulated generation businesses and limits the Group's credit ratings, although Morningstar DBRS expects the increasing investment in concessional assets to support the infrastructure earnings in the future and partially mitigate the construction risk; (4) credit metrics at Acciona will deteriorate as a consequence of the rising level of debt but will continue to support the BBB (low) credit ratings; (5) Acciona's credit ratings are one notch lower than Acciona Energía´s credit ratings and reflect the structural subordination versus debt at its major subsidiaries.

CREDIT RATING DRIVERS
Although a credit rating upgrade is not likely in the short term, we would consider an upgrade if the cash-flow-to-debt ratio were to improve to well above 20.0%, debt-to-capital to below 40.0%, and EBITDA-to-interest to remain well above 4.0 times (x) on a sustained basis… Morningstar DBRS could take a negative credit rating action as a consequence of (1) significant delays in executing the asset rotation plan at Acciona Energía to further mitigate the weakening of its balance sheet, (2) considerable project delays and cost overruns associated with developments under construction in the energy and/or infrastructure business, (3) heightened regulatory risk, or (4) a decline in credit metrics to below Morningstar DBRS' required levels for the current credit rating (i.e., cash flow-to-net debt below 10.0% and net debt-to-capital above 42.0% on a sustained basis and without the implementation of financial remedies).

EARNINGS OUTLOOK
For the 2025-27 period, Morningstar DBRS expects recurrent EBITDA (excluding capital gains from the asset rotation) to remain slightly above EUR 2.0 billion. In the Energy division, Morningstar DBRS considers the higher installed capacity and generation output to partially mitigate the lower energy prices, particularly in Spain. In the Infrastructure business, Morningstar DBRS notes the increasing contribution from concessional activity while construction remains strong with high backlog. Nordex is expected to continue with the positive trend, increasing its contribution to total EBITDA. Although Morningstar DBRS expects some improvement in cash flow generation compared with 2024, the high level of capex planned for the next three years will continue to lead to negative free cash flow, which the Group plans will be covered mainly by the asset rotation gains and, to a lesser extent, with available cash and increasing indebtedness.

FINANCIAL OUTLOOK
Although some rising debt during the next three years will support the growth plan and cover the expected negative free cash flow, Morningstar DBRS expects the increasing cash flow generation arising from the higher installed capacity, greater concessional activity, and positive contribution from Nordex coupled with the asset rotation execution to keep the average cash flow-to-debt at around 15.0% and debt-to-capital below 55%.

Morningstar DBRS also expects the Group to continue with its prudent financial policy by (1) keeping the merchant exposure at a low level; (2) limiting Energy activity in the U.S. until there is more clarity regarding the renewable energy industry and lower risk on the import tariff imposed by the Trump's administration; and (3) modulating capex to align the growth strategy with the asset divestment plan, protecting financial leverage.

CREDIT RATING RATIONALE
Acciona's credit ratings are supported by (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; and (6) substantial infrastructure backlog for growth. Acciona's credit ratings are constrained by the Company's (1) capex 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, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (13 August 2024), https://dbrs.morningstar.com/research/437781.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)

A) Weighting of BRA Factors
In the analysis of Acciona, the BRA factors are considered in the order of importance contemplated in the methodology.

B) Weighting of FRA Factors
In the analysis of Acciona, the FRA factors are considered in the order of importance contemplated in the methodology.

C) Weighting of the BRA and the FRA
In the analysis of Acciona, the BRA carries greater weight than the FRA.

On 22 May 2025, Morningstar DBRS amended the above press release to add information regarding the credit rating drivers.

Notes:
All figures are in euros unless otherwise noted.

Morningstar DBRS applied the following principal methodologies:
--Global Methodology for Rating Companies in the Regulated Utility and Independent Power Producer Industries (25 November 2024),
https://dbrs.morningstar.com/research/443429
-- Global Methodology for Rating Companies in Services Industries (3 February 2025),
https://dbrs.morningstar.com/research/447184

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (3 February 2025; https://dbrs.morningstar.com/research/447186) which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodologies have also been applied:
Morningstar DBRS Criteria: Approach to ESG Factors in Credit Ratings (13 August 2024)
https://dbrs.morningstar.com/research/437781

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyses corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The primary sources of information used for these credit ratings include Acciona's audited financial statements, quarterly results reports, management projections and budgets, and correspondence with the management. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings to be of satisfactory quality.

Morningstar DBRS 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. Morningstar DBRS trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS 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 Morningstar DBRS 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://dbrs.morningstar.com/research/453791.

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Laura Gutierrez, Assistant Vice President
Rating Committee Chair: Anke Rindermann, Managing Director
Initial Rating Date: 23 April 2020
Last Rating Date: 26 July 2024

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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