Moody’s rates Pacific Gas bonds Baa3

Moody’s Investors Service said it assigned a Baa3 rating to Pacific Gas & Electric Co.’s senior secured debt, including $9.6 billion of reinstated senior secured first mortgage bonds, about $11.9 billion of exchanged senior secured first mortgage bonds, and about $5.9 billion of new, incremental first mortgage bonds.

Moody’s also assigned Pacific Gas’ $252 million of preferred stock a B1 rating.

The agency assigned a Ba2 corporate family rating, Ba3-PD probability of default rating and SGL-2 speculative grade liquidity rating to PG&E Corp.(PCG). Moody’s also assigned a B1 rating to PCG’s about $4.75 billion senior secured (stock pledge only) debt.

“All of the debt in PG&E’s capital structure is secured on a first lien basis by substantially all of the utility’s real assets and certain tangible assets. The parent’s $4.75 billion senior secured debt issuance could be in the form of either term loans or notes, secured in this case by a pledge of the stock of PG&E. All of the proceeds received as part of the debt issuances will be held in escrow until PCG and PG&E emerge from bankruptcy,” the agency said in a press release.

The outlooks are stable.

“PCG and PG&E's stable outlooks reflect our expectation that the utility will reduce wildfire risks and liabilities in its service territory through its significant wildfire mitigation investments and better maintenance of its infrastructure,” Moody’s said.

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