Hattiesburg, Miss. – S&P Global Ratings has raised Cooperative Energy’s issuer credit rating from ‘A-’ to ‘A’. S&P Global Ratings also raised its rating on the cooperative’s series 2009A Mississippi Business Finance Corporation’s $40 million Gulf Opportunity Zone Bonds from ‘A-’ to ‘A’ with a stable outlook. Cooperative Energy (Cooperative), which recently changed its name from South Mississippi Electric Power Association, is a not-for-profit generation and transmission cooperative that provides wholesale electric service to 11 retail electric distribution cooperatives located in the southern and western portions of the state of Mississippi.
The rating upgrade is based on a number of factors, including the Cooperative’s strong liquidity position, projected fixed charge coverage ratios and stable debt balances. The rating agency views Cooperative Energy’s projected capital expenditures and debt management plans as reasonable.
“This favorable action by S&P follows rating agency upgrades by Moody’s in November 2015 and Fitch one month ago,” said Cooperative Energy President/CEO Jim Compton. “The strength of our not-for-profit, member-owned, cooperative business plan is being recognized broadly.”
Hattiesburg, Miss.-based Cooperative Energy is a generation and transmission (G&T) cooperative. It produces and purchases the electricity it sells to its 11 Member distribution cooperatives and their 423,000 retail members. Its end-use members’ energy consumption places it among the 15 largest G&T cooperatives in the U.S. by member energy sales. The utility reported nearly $1.2 billion of debt as of Dec. 31, 2015.
Cooperative Energy’s credit strength is supported by long-term, all-requirements contracts with its Members. These contracts are stable and predictable contributors to the company’s revenue stream. The stable outlook reflects Cooperative Energy’s track record of sound debt service and fixed charge coverage, strong liquidity, a positive financial forecast, a manageable capital program, and stable debt balance projections.
“This rating upgrade reflects the success of our strategy to move from purchased power to owned generation resources, and from coal to natural gas and renewable energy,” said Compton. “The result for our members is lower borrowing costs and favorable rates.”
Cooperative Energy works with the Power of 12 (Cooperative Energy and 11 Member electric cooperatives) to provide electricity from the Mississippi Delta to the Coast. The 11 distribution cooperatives own and maintain approximately 56,900 miles of distribution lines and provide service to approximately 423,000 homes and businesses throughout 55 counties in Mississippi.