Global credit rating provider, S&P Global Ratings said it has stripped America’s power utility PG&E Corp of its investment-grade credit rating.
The rating agency said it has kept it under review for a further downgrade, citing political and regulatory pressure and uncertainty as it faces massive claims stemming from deadly wildfires.
PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage
The utility, whose roughly $18 billion in bonds fell on Monday due to bankruptcy fears, has come under severe pressure since a fatal Camp fire in November compounded the company’s woes. It currently faces billions of dollars in liabilities related to wildfires in 2017 and 2018.
S&P cut the rating on both PG&E and its Pacific Power & Gas Co operating utility to “B” from its previous rating of “BBB-,” the lowest tier of so-called investment-grade ratings.
The ratings agency said it could further cut the company’s rating over the next few months if explicit steps are not taken by authorities to improve the regulatory situation, signaling that the agency may be losing faith that lawmakers could rescue PG&E.
“We could also lower the ratings by one or more notches if management does not clearly articulate specific steps it will take to preserve credit quality over the long term,” S&P said.