Moody’s rates Southern notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to Southern Co.’s series 2015A junior subordinated notes due Oct. 15, 2075 and affirmed the Baa1 senior unsecured rating and Prime-2 short-term rating for commercial paper.

The outlook is negative.

Moody’s said the notes’ Baa2 rating is one notch below Southern's Baa1 senior unsecured rating as they are subordinated to substantially all of the company's other debt obligations. The notes have a long-dated maturity (60 years) and Southern can opt to defer coupons on a cumulative basis.

In Moody's view, the notes have equity-like features that allow them to receive basket B treatment in the capital structure (i.e. 25% equity or "hybrid equity credit" and 75% debt for financial leverage purposes).

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