Skip to main content

Market Overview

PG&E Continues Fall After Credit Rating Cut To Junk Status

Share:
PG&E Continues Fall After Credit Rating Cut To Junk Status

Things went from bad to worse Tuesday for PG&E Corporation (NYSE: PCG) and its investors after a credit rating downgrade sent shares tumbling for the second straight day.

After Monday's close, S&P Global cut PG&E Corp’s credit rating from BBB- to B, a move that drops the company’s debt from investment grade to “highly speculative” non-investment grade, or “junk” status.

S&P said PG&E could be subject to further credit downgrades in coming weeks “if management does not clearly articulate specific steps it will take to preserve credit quality over the long term.”

Hardly A Surprise

The rating cut wasn’t particularly surprising after a pair of troubling reports sent PG&E shares plummeting more than 20 percent Monday. CNBC reported the company could face a minimum of $30 billion in liabilities related to California wildfires in 2017 and 2018, citing unnamed sources. The CNBC report followed a Reuters story over the weekend suggesting the utility is considering a bankruptcy filing and will potentially be taking a major financial charge in Q4.

In June, California found PG&E equipment was responsible for starting dozens of fires throughout the state in 2017. The state is now investigating whether PG&E equipment was responsible for starting 2018’s Camp Fire, the most destructive wildfire in California history.

A potential $30 billion in liability for PG&E would far outpace its market cap of $8.8 billion.

On Monday, Height Capital Markets analyst Clayton Allen predicted a potential rating cut to junk status.

“We argue bankruptcy may be a substantive solution for several of PCG’s woes, and should be considered a credible risk by shareholders,” Allen said.

Following Tuesday’s 10-percent drop, PG&E stock is now down 65 percent overall in the past three months.

Related Links:

PG&E Stock Slammed Following Reports Of Massive Wildfire Liability, Potential Bankruptcy

Morgan Stanley Updates Outlook For PG&E After Mixed Wildfire Developments

Latest Ratings for PCG

DateFirmActionFromTo
Mar 2021Wells FargoUpgradesUnderweightEqual-Weight
Jan 2021Morgan StanleyMaintainsEqual-Weight
Jan 2021Wells FargoDowngradesEqual-WeightUnderweight

View More Analyst Ratings for PCG
View the Latest Analyst Ratings

 

Related Articles (PCG)

View Comments and Join the Discussion!

Posted-In: Clayton Allen Height Capital Markets S&P GlobalDowngrades Analyst Ratings Movers Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
PPDBairdDowngrades48.0
OSPNSidoti & Co.Upgrades39.0
PLTSidoti & Co.Upgrades48.0
LRCXArgus ResearchMaintains725.0
ROSTLoop CapitalMaintains145.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com