JACKSON — Lower credit ratings may be causing Mississippi Power Co. to pay more to borrow money.
Moody’s Investors Service became the second credit rating agency to downgrade Mississippi Power last week, days before the unit of Atlanta-based Southern Co. returned to the bond market to borrow $200 million. The company borrows money frequently as a normal part of its business. Some proceeds will go toward the $4.8 billion power plant the company is building in Kemper County.
Jeff Shepard, a Mississippi Power spokesman, said Tuesday the company paid a slightly higher interest rate than it had planned when it sold bonds Monday. He said that may have resulted from a combination of the downgrades and competition with other utilities selling bonds the same day.
But Shepard said low interest rates are still aiding the company. Mississippi Power recently said low borrowing costs and higher sales of byproducts from Kemper would offset the more than $400 million in cost overruns.
“Yes, we found it more difficult to secure the debt,” Shepard wrote in an email. “We expected to get a lower interest rate, but several factors contributed. We still don’t know the full effect of the downgrades, but currently, our customers are benefiting from the company’s ability to take advantage of low cost debt.”
The 30-year bonds will yield 3.97 percent interest, Thomson Reuters reported.
Moody’s Investors Service cut its rating on about $1 billion in company debt by a notch last week. It now rates Mississippi Power as A3, still an investment grade, but down from A2. Moody’s also said it had a negative outlook for the future, meaning it could cut grades again. Fitch Ratings announced a similar downgrade in July.
Both agencies cited the cost of the Kemper facility, which Mississippi Power calls Plant Ratcliffe.
The agencies also cited the Mississippi Public Service Commission’s denial of a $55 million Mississippi Power rate increase to pay off debt during the plant’s construction.