Fitch Ratings on Jan. 16 downgraded the $1.1 billion senior secured notes of Warren Buffett's 550-MW Topaz Solar Farm, and the $140.4 million of 5.125% series B trust certificates due 2038 of the 250-MW Genesis Solar Energy Project to C from BBB-.
The rating agency also affirmed the AAA and stable outlook on Genesis Solar's $561.6 million of 3.875% series A trust certificates due 2038. The negative watch ratings on the solar projects were removed.
The rating actions were prompted by Fitch's downgrade of Pacific Gas and Electric Co., or PG&E, the sole off-taker of the solar farms' output under separate 25-year power purchase agreements.
On Jan. 14, the rating agency lowered the long-term issuer default ratings of parent company PG&E Corp. and its PG&E subsidiary to C from BBB-, after the companies declared plans to file for Chapter 11 bankruptcy protection.
"Loss of the [power purchase agreement] contract in PG&E's potential bankruptcy could weaken the project's financial profile, and in a merchant scenario, its cash flows could be inadequate to repay the debt," Fitch analysts said in the reports.
Fitch said that a downgrade of PG&E to D would not reflect to Topaz Solar and Genesis Solar if the utility continues to honor its PPA commitments.
On Jan. 11, S&P Global Ratings downgraded Topaz Solar by two notches, "capped" by its view of the credit quality of PG&E.
Buffett's MidAmerican Solar LLC, a subsidiary of Berkshire Hathaway Energy, brought the Topaz project online in 2014. Buffett bought the Topaz project, along with its 25-year power purchase agreement with Pacific Gas & Electric, in 2009.
Genesis Solar is owned by subsidiaries of NextEra Energy Inc.