PG&E misses interest payment on 2024 notes; bonds, shares plummet

FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

NEW YORK (Reuters) – The price of bonds and shares in PG&E Corp (PCG.N) plummeted after the California power company failed to make a $21.6 million interest payment due Tuesday on its 2024 senior notes.

Nearly all of the company’s $18 billion in debt was trading down, while the share price has fallen 19.7 percent. 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 U.S. power utility by customers, said on Monday 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 694308GS0=, which is worth $800 million and sports a 5.4 percent 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 U.S. Treasury securities, rose by 4.77 percentage points.

Reporting by Kate Duguid; Editing by Tom Brown

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