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Moody's views Southern/KMI pipeline deal as credit positive

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Moody's views Southern/KMI pipeline deal as credit positive

Moody'sviews Southern Co.'s$1.47 billion acquisition of a 50% interest in the 7,600-mile pipeline systemas credit positive.

Kinder MorganInc. is selling the stake in the pipeline system that connects gassupply regions in Texas, Louisiana, Mississippi, Alabama and the Gulf of Mexicoto consuming markets across the Southeast. Almost 45% of the pipeline's volume is already purchased bySouthern subsidiaries, including for natural gas plants operated by and

Accordingto Moody's, Southern Co. is likely to fund a significant portion of thetransaction with equity that should not materially affect its cash flowcoverage metrics. The ratings agency expects Southern Co. to maintain a 15% pre-workingcapital cash flow fromoperations to debt ratio over at least the next two years.

Southern Co. has a Baa2 rating at Moody's while SouthernNatural Gas Co. is rated Baa3 with a possibility for upgrade.

Theproposed deal follows Southern Co.'s purchase of AGL Resources Inc., which is now known as .