FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

NEW YORK (Reuters) - PG&E Corp PCG.N bonds and shares plummeted after the California power company failed to make a $21.6 million interest payment due Tuesday on its 2040 senior notes, as it planned to seek Chapter 11 bankruptcy protection.

Nearly all of the company’s $18 billion in debt was trading down, while the share price has fallen 21.7 percent. In a form filed with the U.S. Securities and Exchange Commission on Monday, PG&E announced its intention to not make the payment.

In response to a request for comment, the company cited the SEC filing, which also noted that “Under the indenture governing the 2040 Notes, PG&E has a 30-day grace period to make the interest payment before triggering an event of default.”

PG&E, which owns the biggest U.S. power utility by customers, said on Monday it was preparing to file for Chapter 11 as soon as this month as it faces a potential $30 billion in liabilities linked to California’s catastrophic wildfires in 2017 and 2018. Its shares and bonds have been falling since.

The 2040 bond 694308GS0=, which is worth $800 million and sports a 5.4 percent coupon, fell by 4.75 points on Tuesday. Its yield spread, or additional compensation demanded by investors to hold a risky bond over safer U.S. Treasury securities, rose by 4.77 percentage points.

Despite losses on the 2040 bond, the largest drops in price and widening of spreads were concentrated in shorter maturities, implying that the market continues to price in some expectation of recovery.

PG&E had three of the 10 most-traded U.S. corporate bonds on Tuesday, MarketAxess data showed, of which the most actively traded was a $3 billion note coming due in March 2034 694308GE1=.