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S&P puts Ruby Pipeline on negative watch, citing PG&E's eroding credit quality

S&P Global Ratings is considering a downgrade to its rating on Ruby Pipeline LLC after issuing a large credit rating cut to its largest anchor shipper, PG&E Corp.

The rating agency on Jan. 9 placed its BBB- issuer credit rating on Ruby Pipeline, a Kinder Morgan Inc. and Pembina Pipeline Corp. venture, on CreditWatch with negative implications.

S&P expects that the pipeline company's operating cash flow would take a hit if PG&E does not meet its off-take obligations, being responsible for one-third of Ruby's contracted volumes. The rating agency also expects Ruby to have a difficult time re-signing contracts at existing rates.

S&P downgraded PG&E, as well as its utility Pacific Gas and Electric Co., from an investment grade BBB- to B, well into junk status, citing an eroding political and regulatory environment. Shares of the utility holding company slid after reports that it may sell its gas utility business or file for bankruptcy protection as insurance claims and other potential liabilities from deadly California wildfires may hurt its finances.

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 in the Sources section.