S&P Global Ratings on June 13 downgraded the issuer credit ratings of PG&E Corp. and subsidiary Pacific Gas and Electric Co. to BBB from BBB+ on the initial results of the wildfire investigation in California.
The California Department of Forestry and Fire Protection has determined that the companies' equipment was involved with 16 of the Northern California wildfires in late 2017. PG&E recently said the uncertainty associated with the wildfire could impact its access to needed financing to support capital investment plans.
"This development, in our opinion, increases the companies' business risk," said S&P. "We expect that these developments may also divert the company's attention from its main strategic focus due to the legal challenges, lawsuits, and increasingly complex operational risks that it may encounter."
PG&E's 2017 funds-from-operations-to-debt ratio was 19.8%, and S&P expects its financial measures to "modestly weaken," to reflect FFO-to-debt of about 18%.
S&P continues to place the ratings on CreditWatch with negative implications.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.