Moody’s downgrades Hawaiian Electric’s credit to junk amid Maui wildfire scrutiny
2023.08.18 06:05
© Reuters. FILE PHOTO: A view of the remains of a building after it was destroyed during wildfires, in Kula, Maui island, Hawaii, U.S., August 13, 2023. REUTERS/Mike Blake
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(Reuters) – Ratings agency Moody’s (NYSE:) Investors Service downgraded utility Hawaiian Electric Industries (NYSE:)’s credit rating to junk status on Friday, the second such cut this week as investors worried about the company’s potential role in the wake of the Maui wildfires.
Moody’s cut its rating for Hawaiian Electric’s senior unsecured notes to Ba3 from Baa1, its preferred stock rating to B3 from Baa3 and its short-term rating for commercial paper to “Not Prime” from “Prime-2”.
Shares of the utility company fell about 2% in premarket trading, after plunging nearly 63% so far this week.
Class-action lawsuits this week alleged Hawaiian Electric, the largest electricity supplier in Hawaii, was responsible for the deadly Maui fires because it failed to shut off power lines despite warnings that high winds might spark wildfires.
“The downgrade is prompted by the heightened uncertainty facing the company that could result in significant financial liabilities if the utility is found to be at fault,” said Nati Martel, Moody’s senior analyst.
“Regulatory risk related to cost recovery for system rebuilding” was also a factor, he added.
Hawaiian Electric did not immediately respond to a Reuters request for comment.
S&P Global (NYSE:) Ratings also downgraded the company to junk status on Tuesday, placing it on watch for further downgrades.
