PG&E Bonds Fall on News of Second Power-Line Failure in Fire

(Bloomberg) -- PG&E Corp. bonds, which gained late last week as a regulator eased concerns over a possible bankruptcy, are falling this morning after the utility disclosed that a second power line failed the morning California’s deadliest fire began.

The company’s 3.5 percent notes due in 2020, the third most active in the investment-grade market this morning, are trading 60 basis points wider than where the securities closed on Friday. Its longer-dated bonds, 6.05 percent due in 2034, are about 15 basis points wider.

PG&E Bonds Fall on News of Second Power-Line Failure in Fire

Several of the company’s bonds have seen dramatic price swings over the past several days, unusual for a utility, a sector known for its defensive, non-cyclical, and stable nature. These moves have come as authorities zero in on the utility’s equipment as a possible cause of the fire.

“The market is not treating this like a utility anymore,” said Morningstar analyst Travis Miller in a phone interview on Friday.

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