On June 2, 2025, Pacific Gas and Electric Company (PG&E) entered into an underwriting agreement for a substantial issuance of mortgage bonds, followed by the successful sale completion on June 4, 2025. The bond issue comprises \(400 million of 5.000% First Mortgage Bonds due 2028 and \)850 million of 6.000% First Mortgage Bonds due 2035, collectively totaling $1.25 billion in new debt financing.
This strategic bond issuance directly impacts PG&E’s capital structure and financial leverage. As of the fiscal quarter ended June 30, 2024 (Q2 2024), PG&E reported total liabilities of approximately \(104.5 billion, with long-term debt constituting \)52.7 billion and short-term debt at $4.97 billion. The long-term debt to capitalization ratio stands at 61.08%, reflecting the company’s leveraged stance typical of capital-intensive utilities.
The new mortgage bonds increase PG&E’s debt obligations by 2.4%, adding to its sizable debt portfolio. Given the coupon rates—5.000% and 6.000%—the company is positioned to undertake interest expense commitments approximately between \(62.5 million and \)75 million annually from these new bonds alone, assuming the bonds are held to maturity without early redemption.
This debt infusion is integral for PG&E’s ongoing infrastructure investments, capital projects, and modernization initiatives, consistent with the utilities sector’s characteristic capital intensity and regulatory-driven investments. The company’s ability to service this debt will be closely tied to regulatory frameworks and tariff settings that underpin its revenue streams.
From prior earnings call discussions, PG&E’s management has emphasized capital expenditure plans directed towards grid modernization, resilience improvement, and renewable integration—initiatives funded partly through debt instruments like these mortgage bonds. Interest expenses have been an area of focus, and launch of these mortgage bonds aligns with the forward-looking financial strategy to balance growth investments with sustainable leverage.
In the broader context, PG&E’s issuance underscores the sector-wide dynamics where regulated utilities leverage debt markets to meet substantial capital expenditure needs amid the energy transition and infrastructure upgrade wave.
For detailed underwriting terms and further bond specifics, please refer to the official SEC filing here: https://sec.gov/Archives/edgar/data/1004980/000119312525134966/d847651d8k.htm
Tags: PCG, Pacific Gas and Electric Company, Q2 2024, Mortgage Bonds, Capital Structure, Debt Financing