PG&E is tanking after S&P downgrades it to junk
- PG&E's credit rating was cut to junk at S&P Global Ratings, sending shares down more than 10% early Tuesday.
- The downgrade came as bad news has piled up for PG&E amid its potential liabilities from last year's California wildfires, the credit-rating agency said.
- On Friday, the utility announced that its board of directors would review the company's management. Meanwhile, a report said PG&E was considering filing for bankruptcy protection.
- Watch PG&E trade live.
PG&E, California's biggest utility provider, plunged more than 11% early Tuesday after the credit-rating agency Standard and Poor's downgraded the utility to junk amid its potential liabilities from last year's California wildfires.
S&P Global Ratings lowered PG&E's credit rating to "B," which is two notches below the investment grade threshold. "We expect that negative public sentiment and the increased political pressure will challenge the regulators' willingness and ability to implement measures to protect credit quality over the near term," S&P said.
The downgrade came as bad news has piled up for PG&E, according to the agency.
On November 8, the deadliest and most destructive wildfire in California history broke out. PG&E said it was having trouble with its transmission lines when the blaze erupted, and that it may be responsible.
In mid-November, people who lost their homes in the fire sued the company, alleging it was a "direct and legal result of the negligence, carelessness, recklessness, and/or unlawfulness."
And a month later, The California Public Utilities Commission opened a proceeding into the company falsifying safety documents for natural gas pipelines between 2012 and 2017.
With shares tanking about 50% over the prior two months, PG&E announced Friday that its board of directors would reviewing the company's management, finances, governance, and structural options. Also late Friday, a report said PG&E was considering filing for bankruptcy protection as it fears a massive charge related to billions in costs associated with the wildfire.
PE&G's management-review announcement and media speculation of a potential bankruptcy led S&P to make the downgrade.
"These conditions may significantly limit the company's options including its ability to consistently finance or safely operate its businesses," S&P said.
"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."
Now read:
- Iconic hedge-fund billionaire Seth Klarman could have lost nearly $300 million on an ill-timed bet on PG&E
- $21 billion hedge fund BlueMountain Capital has upped its bet on PG&E, the utility that's crashed 60% since the California wildfires. Here's why.
- PG&E is tanking after report says it's considering filing for bankruptcy protection (PCG)
- California's biggest utility provider has seen half its market value wiped out since the wildfires started
- California's biggest utility provider spikes after regulator eases fears of bankruptcy following deadly wildfire
