The credit rating agency downgraded the unit's rating to 'D' from 'CC' after Pacific Gas and Electric failed to make the $21.6 million interest payment due on Tuesday, as the company planned to seek Chapter 11 bankruptcy protection.

The latest cut comes two days after both Fitch and S&P downgraded PG&E and its Pacific Power & Gas Co unit in the face of massive claims stemming from deadly wildfires.

PG&E, which provides electricity and natural gas to 16 million customers in northern and central California, faces widespread litigation, government investigations and liabilities that could potentially exceed $30 billion because of the fires.

The most recent fire last November killed at least 86 people in the deadliest and most destructive blaze in California history.

San Francisco-based PG&E is working on lining up roughly $5.5 billion in so-called debtor-in-possession financing to help operations during bankruptcy proceedings.

(Reporting by Aakash Jagadeesh Babu in Bengaluru; Editing by Tom Brown and Peter Cooney)