California utility PG&E's credit rating lowered to junk as it faces billions in wildfire claims

A Moody's downgrade cited challenges for the power company as it faces potentially big liabilities related to wildfires.

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By Reuters

Moody's on Thursday joined S&P in lowering PG&E Corp's credit rating deeper into junk territory, citing a challenging environment for the California power provider as it faces billions of dollars in liabilities related to wildfires.

Moody's, which cut PG&E's rating to B2 from Baa3, said access to capital has become more uncertain for the company.

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The downgrade followed a Reuters report on Friday, citing sources, that the utility company was exploring filing for bankruptcy protection.

Moody's also downgraded its ratings of PG&E unit Pacific Gas & Electric Co to Ba3 from Baa2.

"The company (PG&E) is increasingly reliant on extraordinary intervention by legislators and regulators, which may not occur soon enough or be of sufficient magnitude to address these adverse developments," Jeff Cassella, Moody's vice president-senior credit officer, said in a statement.

S&P cut the rating on PG&E and its Pacific Power & Gas Co unit on Monday to "B" from "BBB-," the lowest tier of so-called investment-grade ratings.

The wildfire, which killed at least 86 people, broke out on the morning of Nov. 8 near the mountain community of Paradise. It is said to be one of the most destructive wildfires in California's history.

Moody's said it would continue to look for signs of legislative and regulatory support for PG&E, as the company works through various investigative, legal and regulatory processes.