Fitch cuts Mississippi Power, Southern outlook negative

Fitch Ratings said it revised Southern Co.'s outlook to negative from stable and affirmed its long-term issuer default rating and senior unsecured notes at A and its short-term issuer default rating and commercial paper at F1.

The outlook is also negative for subsidiaries Southern Co. Capital Funding, Inc., Georgia Power Co. and Georgia Power Capital Trust VII.

The agency downgraded Mississippi Power Co.'s long-term issuer default rating to A from A+, senior unsecured notes to A+ from AA-, pollution control revenue bonds to A+ from AA-, preferred securities to A- from A and short-term issuer default rating and commercial paper to F1 from F1+.

The outlook for Mississippi Power and Southern's remaining subsidiaries is stable.

The agency said the one-notch downgrade for Mississippi Power reflects the higher business risk assumed by the utility with its decision to proceed with the proposed Kemper County Integrated Gasification Combined Cycle project. Fitch views the project as relatively large and complex for a utility of Mississippi Power's size.

The revision of Southern's outlook to negative reflects concerns around rising business risk at several of its utility subsidiaries, Fitch said, and consolidated credit metrics have moved downwards in the recent years. For the last 12 months ended June 30, the total debt-to-EBITDA ratio was 3.9 times.

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