PG&E hit with another downgrade

PG&E shares tumbled again Friday as investors pondered an estimate that the embattled utility’s wildfire-related liabilities for the devastation of 2017 and 2018 total “at least” $15 billion.

“Extraordinary intervention” for PG&E may be needed from state lawmakers and regulators to help it avoid bankruptcy, according to the assessment from Moody’s Investor Services, which downgraded PG&E’s credit rating to junk status.

Earlier this week, S&P Global Ratings downgraded PG&E to junk levels. Both ratings agencies warned that further downgrades were possible if the company’s financial condition doesn’t improve swiftly.

“We see a much more challenging environment for PG&E, as potential liabilities grow, liquidity reserves decline and access to capital becomes more uncertain,” Jeff Cassella, Moody’s chief credit officer, said of the difficulties facing the utility.

As examples of the liquidity squeeze: Although PG&E’s wildfire liabilities could reach or top $15 billion, Moody’s estimated PG&E has a cash balance of $2 billion. Plus, with the company’s credit at junk status, PG&E might be obliged to post as much as $800 million in collateral for items such as attempting to procure energy, according to the Moody’s assessment. The company disclosed in a November regulatory filing that it had exhausted a $3 billion credit line.