Fitch downgrades Hawaiian Electric to junk on worries over wildfire exposure - Reuters

Fitch downgrades Hawaiian Electric to junk on worries over wildfire exposure | Reuters

Fitch downgrades Hawaiian Electric to junk on worries over wildfire exposure

NEW YORK/BENGALARU, Aug 21 (Reuters) - Fitch on Monday downgraded Hawaiian Electric Industries' (HE.N) credit rating to junk status, becoming the third ratings agency to flag risks associated with the utility's potential exposure to liabilities related to the wildfire in Maui.

It cut the utility's long-term issuer default rating to "B" from "BBB+" and put the stock on "Rating Watch Negative."

"The rating action reflects potential exposure to large third-party wildfire-related liabilities if utility equipment is determined to have ignited recent wildfires in Maui," Fitch said.

The cause of the fires is still being investigated. But the Honolulu-based company, Hawaii's largest utility, has been blamed for them in class-action lawsuits claiming the utility failed to shut off power lines despite warnings that high winds might blow them down and spark wildfires.

The agency said potential liabilities could be above $3.8 billion, which represents an "existential threat" to the company. Hawaiian Electric shares ended the day 5.3% lower at $13.04.

Following the downgrade, Hawaiian Electric said in an emailed statement it continues to focus on the supporting those affected by the Maui fires and doing the best it can to help in recovery and rebuilding efforts.

"We are seeing speculation and opportunism in the market, even as the work to determine what happened remains ongoing and will continue to take some time," the company said.

"Importantly, the state, the island of Maui and our customers need a strong, financially healthy local utility to power our future, and we are focused on ensuring Hawaiian Electric is well positioned to continue serving in this critical role."

Last week, Moody's and S&P Global downgraded the company to junk status. Hawaiian had said it was not looking to restructure but was seeking expert advice amid investor worries over its role in the Maui wildfires that have claimed at least 114 lives.

Shares of Hawaiian have lost roughly 66% of their value since the wildfire began on Aug. 8.

Reporting by Sourasis Bose in Bengaluru; Additional reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Arun Koyyur and David Gregorio

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