Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Action:

Moody's places Mississippi Power Company on review for downgrade

Global Credit Research - 06 Feb 2017

Approximately $800 million of debt securities affected

New York, February 06, 2017 -- Moody's Investors Service, ("Moody's") placed Mississippi Power Company's ratings on review for downgrade, including its Baa3 senior unsecured, Baa3 Issuer Rating, Ba2 preferred stock and VMIG-3 short-term pollution control revenue bond rating. The ratings of the parent company, The Southern Company (Southern, Baa2 senior unsecured) are unchanged.

On Review for Downgrade:

..Issuer: Eutaw (City of) AL, Industrial Dev. Board

....Senior Unsecured Revenue Bonds, Placed on Review for Downgrade, currently Baa3

....Senior Unsecured Revenue Bonds, Placed on Review for Downgrade, currently VMIG 3

..Issuer: Harrison (County of) MS

....Senior Unsecured Revenue Bonds, Placed on Review for Downgrade, currently Baa3

....Senior Unsecured Revenue Bonds, Placed on Review for Downgrade, currently VMIG 3

..Issuer: Mississippi Business Finance Corporation

....Senior Unsecured Revenue Bonds, Placed on Review for Downgrade, currently Baa3

....Senior Unsecured Revenue Bonds, Placed on Review for Downgrade, currently VMIG 3

..Issuer: Mississippi Power Company

.... Issuer Rating, Placed on Review for Downgrade, currently Baa3

....Pref. Stock Preferred Stock, Placed on Review for Downgrade, currently Ba2

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Baa3

Outlook Actions:

..Issuer: Mississippi Power Company

....Outlook, Changed To Rating Under Review From Negative

RATINGS RATIONALE

"The review of Mississippi Power's ratings considers the declining competitiveness of the Kemper Integrated Gasification Combined Cycle (IGCC) plant as project costs have continued to rise, operating costs are increasing, and natural gas prices remain low" said Michael G. Haggarty, Associate Managing Director. As of the end of 2016, total project costs had increased to over $7 billion, more than double the original estimate. The review also reflects the continued inability of the company to place the plant into service, with nine schedule extensions of the in-service date announced thus far, the most recent last week. These developments increase the risk that the company will not receive full regulatory recovery of $2.88 billion of plant costs subject to a cost cap established by the Mississippi Public Service Commission, $1.5 billion of costs not subject to the cap, which continue to increase, and higher operating costs once the plant is placed into service.

On 31 January 2017, Southern and Mississippi Power disclosed that the updated annual Southern system fuel forecast for 2017, completed late last year, reflected significantly lower long-term estimated natural gas costs than had been previously projected. As a result, Mississippi Power is updating the Kemper IGCC plant's "project economic viability analysis", which compares its competitiveness to a natural gas combined cycle plant. The utility has indicated that this analysis is required by the Mississippi Public Service Commission and has not been done since 2015. Southern and Mississippi Power expect the reduction in projected long-term natural gas prices and higher estimated operating costs for the project to negatively impact the analysis.

The review of Mississippi Power's rating will consider the results of the utility's project economic viability analysis, which the company expects to be completed before the end of this month; the impact that analysis may have on the company's regulators and the prospects for recovery of the remaining recoverable project costs; the company's success or failure in meeting the latest projected in-service date of late February; the parent company's continued credit and liquidity support for Mississippi Power; as well as the standalone financial condition of Mississippi Power if and when the Kemper plant is fully operational, including whether the utility will exhibit financial metrics consistent with an investment grade rating.

Southern's ratings and stable outlook are unchanged, reflecting Mississippi Power's position as one of Southern's smaller utility subsidiaries, with the Kemper project having a material but thus far manageable impact on the parent's consolidated financial condition. This is particularly the case since Southern's 2016 acquisition of AGL Resources, Inc. (now Southern Company Gas), which increased its overall scale, diversification, and resiliency. Although Southern has taken over $2.5 billion of pre-tax charges related to Kemper, the company's downgrade to Baa2 last year was largely attributable to higher parent debt levels and lower financial metrics due to the largely debt financed AGL acquisition.

Southern's rating could be negatively affected if there are additional, material debt financed acquisitions at the parent company; if there are further delays or cost increases at Georgia Power Company's (A3 stable) Vogtle new nuclear construction project; or if there is rating pressure at one of its larger subsidiaries, including Georgia Power, Alabama Power Company (A1 stable), Southern Power Company (Baa1 stable), Southern Company Gas (unrated), or Southern Company Gas Capital (Baa1 stable).

We continue to monitor developments with regard to the decline in the credit quality of Toshiba Corporation (Caa1, ratings under review), the parent company of the Vogtle project EPC contractor Westinghouse Electric Company, LLC (unrated), and their commitment to the nuclear power business. Westinghouse has provided Georgia Power and the other Vogtle project owners with letters of credit totaling $920 million, somewhat mitigating this risk. We believe, however, that Southern's updated annual system fuel forecast has also negatively affected the competitiveness and economic rationale of the Vogtle nuclear project.

Rating Outlook

Mississippi Power's ratings are on review for downgrade.

What Could Change the Rating - Down

Mississippi Power's ratings could be downgraded if the pending project economic viability analysis indicates that there has been a material decline in the cost competitiveness of the Kemper plant or that it is no longer economically viable; if we believe the prospects for regulatory recovery of remaining recoverable project costs or operating costs have declined; or if there are any indications that the parent company will reduce or scale back its thus far strong financial and liquidity support for Mississippi Power. The utility could also be downgraded if we expect financial metrics to remain below investment grade parameters for an extended period following commercial operation of the Kemper plant, including cash flow from operations pre-WC to debt below 13%.

The principal methodology used in these ratings was Regulated Electric and Gas Utilities published in December 2013. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The Southern Company is a utility holding company headquartered in Atlanta, Georgia and the parent company of utility subsidiaries Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Southern Company Gas, Southern Electric Generating Company, wholesale power company Southern Power Company, financing subsidiaries Southern Company Gas Capital and Southern Company Capital Funding, Inc., and commercial paper issuer Southern Company Funding Corporation.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Michael G. Haggarty
Associate Managing Director
Infrastructure Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Jim Hempstead
MD - Utilities
Infrastructure Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2017 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.