Moody’s Ratings has changed the outlook for Southern Company to negative from stable. Georgia Power’s outlook was moved to stable from positive. Moody’s also confirmed both companies’ existing ratings.
Southern keeps its Baa1 senior unsecured rating and Prime-2 commercial paper rating. Georgia Power keeps its A3 issuer and senior unsecured ratings.
Moody’s said Southern’s negative outlook is because its financial metrics may not stay strong enough for the Baa1 rating. This is mainly due to higher debt supporting a $76 billion capital investment plan over the next five years. That is up from a previous $63 billion plan.
Jeff Cassella from Moody’s explained that Southern’s cash flow compared to debt is expected to stay around 15% for the next few years. This is below the 16% level Moody’s expected when it last upgraded the company. To help fund investments, Southern plans to issue $9 billion in new equity, with nearly half already completed.
Georgia Power’s outlook change to stable reflects a lower chance of reaching the financial strength needed for an A2 rating. The utility has a rate plan settlement freezing base rates through 2028, while its capital investments have grown due to expected new large customers.
For the year ending June 30, 2025, Southern’s cash flow to debt ratio was 14%, while Georgia Power’s was 18.4%. Without hurricane-related deferred costs, these would have been about 15% and 22%, respectively.
Moody’s also affirmed Southern Electric Generating Company’s A2 rating with a stable outlook and Southern Company Funding Corporation’s Prime-2 commercial paper rating.
