PG&E Share, Bond Price Declines
Shares of PG&E Corporation on Tuesday had another terrible day following Monday’s 50 per cent drop. At one point, shares were down as much as 39.5% again today, although some of that was gained back and shares were down 23.5% at 2:55 p.m. EST
The price of bonds and shares in PG&E Corporation fell after the California power company failed to make a $21.6 million interest payment due Tuesday on its 2040 senior notes.
Reuters reported that nearly all of the company’s $18 billion in debt was trading down, while the share price has fallen 19.7 per cent.
In a form filed with the SEC on Monday, PG&E announced its intention to not make the payment.
In response to a request for comment, the company cited the SEC filing, which also noted that “Under the indenture governing the 2040 Notes, PG&E has a 30-day grace period to make the interest payment before triggering an event of default.”
PG&E, which is the owner of the biggest United States power utility by customers, on Monday, said it was preparing to file for Chapter 11 bankruptcy protection as soon as this month amid pressure from the potential $30 billion in liabilities linked to California’s catastrophic wildfires in 2017 and 2018. Prices of shares and bonds have been falling since.
The 2040 bond, which is worth $800 million, and sports a 5.4 per cent coupon, saw its price fall by 4.75 points on Tuesday.
Its yield spread, which refers to the additional compensation demanded by investors to hold a risky bond over safer US Treasury securities, rose by 4.77 percentage points.