It has assigned ATL's bonds (P)Baa3 -- an investment grade rating subject to moderate credit risk.
"The outlook on the ratings is stable. ATL will apply the proceeds of the proposed bond issuance to partially refinance existing bank loan facilities," Moody's said in a statement.
The rating is provisional, based on the proposed bond's draft documents which have been reviewed by Moody's Investors Service, the statement said.
It is expected that the provisional status of the rating will be removed and a definitive rating will be assigned upon the satisfactory review of the final documents.
"The (P)Baa3 rating primarily reflects ATL's regulated business to operate transmission lines of about 5,000 circuit kilometers, mostly in Central and Western regions of India", says Abhishek Tyagi, a Moody's Vice President and Senior Analyst.
"The (P)Baa3 rating also reflects ATL's moderate financial leverage, combined with its active capex program to expand its transmission network," he said.
ATL's regulated transmission business is underpinned by stable and predictable cash flows that are generated based on pre-determined regulated returns. Such returns support ATL's (P)Baa3 rating and stable outlook.
While ATL has a short track record, Moody's said, the company has been outperforming regulatory expectation, with very high transmission line availability relative to regulatory norms.
It said the rating is challenged by the weak credit quality of its counterparties - state owned distribution companies which have weak financial profiles.