PG&E Corp., which filed for bankruptcy in 2019 following devastating blazes, was upgraded to investment grade by Fitch Ratings after the California legislature boosted the size of a fire insurance fund.
The ratings agency attributed the upgrade to the approval of an additional $18 billion into the fund designed to help utilities pay fire damages, as well as PG&E’s progress in “combating wildfire risk.”
Related: California Plans to Boost Utility Wildfire Fund by $18 Billion
Fitch added that PG&E could also benefit from a new California law that will require a study to examine how to more effectively spread the cost of wildfires.
PG&E didn’t immediately respond to a request for comment.
Fitch’s decision reflects a years-long effort by PG&E to fully rebound from one of the worst periods in its history. The company became the largest utility to file for bankruptcy when it did so in 2019. That came just weeks after PG&E was downgraded to junk, in an unusually rapid collapse triggered after the company’s equipment sparked the 2018 Camp Fire in Northern California. PG&E exited bankruptcy in 2020 after agreeing to settle fire-related claims for about $25.5 billion.
An investment-grade rating can significantly cut a company’s borrowing costs. But it typically takes two high-grade ratings for investors to consider a company to be part of that asset class, and for its bonds to be included in high-grade indexes. Moody’s Ratings and S&P Global Ratings still count the company as junk.
PG&E had about $60 billion of total debt at the end of June, according to securities filings.