Moody's Downgrades Companies Reliant on PG&E Amid Spector of Bankruptcy

   By Maria Armental 
 

Moody's Investors Service cut the debt of Topaz Solar Farms LLC and Ruby Pipeline LLC to junk, citing the expected bankruptcy of California's largest utility company.

PG&E Corp. intends to file for bankruptcy protection by the end of the month, citing more than $30 billion in potential liability costs related to its role in sparking deadly wildfires in California.

Topaz Solar's revenue and cash flow comes from a long-term power purchase and sales agreement with PG&E that expires in October 2039.

Similarly, PG&E's Pacific Gas & Electric is Ruby's principal shipper, with take-or-pay arrangements that expire in 2026 and comprise about 35% of Ruby's contracted volumes and 25% of total capacity, according to Moody's.

"While we believe that the natural gas contracted to PG&E is needed by PG&E and will continue to flow, the very high likelihood of a bankruptcy filing by PG&E and its parent, PG&E Corp., reduces the quality of the cash flow from PG&E and creates uncertainty about the potential for renegotiation of the contract terms and the ability of Ruby to realize in full its right to collateral against the PG&E contracts," Moody's analyst Terry Marshall said.

Topaz Solar's senior secured debt due 2039 was cut to Caa2 from Baa2, and Ruby's senior unsecured notes were cut to Ba2 from Baa3.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

January 15, 2019 18:11 ET (23:11 GMT)

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