Moody’s gives AEP Transmission notes A2

Moody's Investors Service said it affirmed the A2 issuer rating for AEP Transmission Co., LLC's (AEP Transco), American Electric Power Co.'s (Baa1, stable) intermediate transmission holding company, and assigned an A2 rating to AEP Transmission’s proposed $700 million of senior notes.

Proceeds will be used to repay about $300 million of debt outstanding and for general corporate purposes, including ongoing capital expenditures.

The outlook is stable.

"AEP Transco's A2 rating is driven by its business risk profile as a transmission only holding company operating under the credit supportive regulatory framework established by the Federal Energy Regulatory Commission (FERC)," Moody’s senior credit officer Laura Schumacher said in a news release.

The rating reflects the predictable and timely nature of cash flows that are derived from forward looking formula based rates and the resulting solid credit metrics, the agency added.

The rating also considers the significant capital expenditure programs that are underway at all of AEP Transmission's operating subsidiaries as well as the experience and long track record of its parent company, AEP, in building and operating transmission projects, Moody’s explained.

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