Abengoa SA (ABG), the Spanish low-carbon energy developer, fell to its lowest in almost three years in Madrid as Italy’s solar subsidy cuts raised investor concerns that other euro nations may reduce support for the industry.
Abengoa fell as much as 5.8 percent and traded 4.1 percent lower at 11.49 euros at 12:39 p.m. in Madrid today. Spain’s benchmark Ibex-35 index dropped 2 percent after the financial system’s reliance on central bank funding leaped.
“The fact that Italy may cut renewable energy incentives may set an example for Spain to follow suit as a way to cut debt,” Francisco Salvador, a Madrid-based strategist at FGA/MG Valores, said by phone today.
Italy plans to lower tariffs paid for photovoltaic power plants by as much as 36 percent this year after a surge in installations made it the world’s biggest market for solar panels last year.
The business profile of Seville, Spain-based Abengoa makes it vulnerable to many of the headwinds buffeting stocks globally, Salvador said. The company uses debt financing to develop solar-thermal plants.
Spanish Prime Minister Mariano Rajoy rebutted claims that his country will need a bailout from the European Union and the International Monetary Fund as the cost of government borrowing spiked.
BrightSource Energy Inc., a rival solar-thermal plant developer in the U.S., this week pulled its planned initial public offering, saying the market conditions were too volatile.
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