Moody's Downgrades Companies Reliant on PG&E Amid Spector of Bankruptcy
January 15 2019 - 6:26PM
Dow Jones News
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 maria.armental@wsj.com
(END) Dow Jones Newswires
January 15, 2019 18:11 ET (23:11 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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