Fitch downgrades PG&E

Fitch Ratings said it downgraded PG&E Corp.'s and Pacific Gas and Electric Co.'s long-term issuer default ratings to C from BBB- given that a default-like process has begun with the company.

The company announced that it intends to file for bankruptcy protection for both companies Jan. 29, Fitch explained.

The company also indicated that it does not intend to make an interest payment due Jan. 16 with respect to its 2040 senior notes, the agency noted.

Non-payment of interest is an event of default under its senior bond indenture if not cured within 30 days, Fitch said.

Fitch said it would downgrade the companies to D if the default is not cured or if the company files for bankruptcy protection ahead of the default event.

The agency also said it downgraded Pacific Gas's senior unsecured debt to CC with recovery rating of RR3 from BBB and its preferred stock to C with recovery rating of RR6 from BBB-.

Fitch also downgraded PG&E's senior unsecured debt to C with recovery rating of RR6 from BBB-.

The imminent bankruptcy filing reflects the culmination of a crisis of confidence driven by potential wildfire-related liabilities in the tens of billions of dollars, the agency said.

California typically applies the doctrine of inverse condemnation to privately owned utilities to socialize costs associated with catastrophic wildfires, Fitch said.

The company's position is further complicated by long standing safety challenges in its electric and natural gas businesses, the agency added.

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