Fitch Rates $125MM 5.55% Mississippi Power Company Senior Notes 'AA-'; Outlook Stable

Business Wire, March 05, 2009

NEW YORK -- Fitch Ratings assigns an 'AA-' rating to Mississippi Power Company's (MPC) $125 million series 2009A 5.55% senior notes due March 1, 2019. The new notes are unsecured and rank equally with existing and future unsecured debt of MPC. The proceeds from these notes will be used to repay a portion of its outstanding short-term indebtedness, repay at maturity the $40 million series F note due March 9, 2009 and for general corporate purposes including MPC's continuous construction program. The Rating Outlook is Stable.

Fitch's rating of MPC reflects the continued strong operating performance of a mostly low-cost fleet, a strong and stable financial condition and stable regulatory environment in Mississippi. The 2008 retail revenues increased by 8% due to a base rate increase and higher fuel revenue. The ratio of funds from operations (FFO) to interest expense was 4.85 and 5.10 as of Dec. 31, 2008 and 2007, respectively. The FFO to debt ratios were 26% and 35% for the same periods (including Plant Daniel Lease adjustments).

Fitch's credit concerns include risks associated with relatively high concentration of industrial customers, slow recovery in major industries to pre-Katrina levels, and location of service territory in a natural-disaster-prone region. MPC plans to spend approximately $163 million in 2009, $467 million in 2010, and $1,004 million in 2011 in capital expenditures. The capital expenditures, including the Kemper 582 megawatt IGCC facility, are subject to receipt of a certificate of public convenience and approval thereof by the Mississippi State Public Service Commission (MSPSC).

Fitch's Stable Rating Outlook assumes MPC will supplement internal cash flows with a balanced mix of debt and equity to fund capital spending and other cash needs.

MPC (IDR 'A ', Stable Outlook) is a vertically integrated utility subsidiary of Southern Company (IDR 'A', Stable Outlook) providing electricity to retail customers within the State of Mississippi. MPC serves approximately 187 thousand retail customers. For further information, see Fitch Credit Analysis dated Feb. 19, 2008, available on Fitch's website at www.fitchratings.com.

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