Moody’s affirms AEP Transmission

Moody’s Investors Service said it affirmed the ratings of AEP Transmission Co., LLC, including its issuer and senior unsecured ratings at A2.

The outlook is stable.

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

The agency said the affirmation recognizes the company's plans, consistent with its FERC authorization and recent settlement agreement, to increase its equity layer to 55% from 50% through a combination of capital contributions from American Electric Power Co. and retained cash.

“AEP's plan to increase the amount of equity in AEP Transmission's capital structure will help mitigate the negative impacts of federal tax reform, as well as an April 2018 agreement to lower the allowed return on equity (ROE) for its subsidiaries operating in the PJM Interconnection (PJM),” Moody’s said in a news release.

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