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Fitch's outlook for Southern Co. is 'negative'

ATLANTA — Fitch Rating has assigned a rating of “A” to the $400 million senior unsecured notes issued by the Southern Company (Southern). The new notes will mature Sept. 15, 2015. The proceeds of the notes will be used for the proposed redemption of all or a portion of $250 million of 5.75 percent senior notes due Nov. 15, 2015, to repay a portion of short-term debt and for other general corporate purposes.

The Rating Outlook is “negative.”

Fitch wrote: “Southern’s credit metrics have gradually declined in the recent years. For the last 12 months (LTM) ending June 30, 2010, funds flow from operations (FFO) to total debt stood at 18 percent; compared to approximately 23 percent five years ago. Similarly, total debt to EBITDA has increased over time and was 3.9 times (x) for the LTM ending June 30, 2010.

“In Fitch’s view a number of things have to go right to restore Southern’s credit metrics to their former strength and prompt an outlook revision back to ‘stable.’ These include robust recovery in load across the service territories of the utilities, a constructive rate outcome this December in the pending rate case at subsidiary Georgia Power Company…and successful execution of the large baseload construction programs at Georgia Power and Mississippi Power Company…”


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