PG&E Corp. PCG -25.07% stock and bond prices tumbled on Friday, as Wall Street wagered that the damage from the Kincade Wildfire will likely complicate the utility firm’s attempts to emerge from bankruptcy.
PG&E shares dropped 24%, tumbling $1.70 to $5.50 each in early New York Stock Exchange trading, after the Kincade fire spread through Sonoma County in northern California. The company’s $3 billion bond due 2034 fell about 3.5% to 106.63 cents on the dollar and was the third most actively traded bond Friday with $130 million changing hands, according to data from MarketAxess.
The action reflects expectations that the firm may face some liability for starting the blaze, traders said—an outcome that would likely reduce any potential recoveries by investors in PG&E’s Chapter 11 bankruptcy proceeding.
Officials haven’t determined the cause of the blaze, but PG&E filed a public report Thursday stating it became aware of a broken wire on one of its transmission lines in the area seven minutes before the fire began.
Among the issues at hand Friday: PG&E could be solely responsible for wildfire claims that arise before it emerges from bankruptcy, while payment for postbankruptcy claims could be shared through a statewide wildfire fund that is being set up to help shore up the finances of California utilities.
Close to 2,000 residents of the county in Northern California have been evacuated as the fire quickly grew to over 10,000 acres, fueled by strong winds and dry conditions. PG&E has been under intense pressure in the state for its role in previous fires and for a program of blackouts that aim to limit the likelihood of blazes.