Moody's assigns Baa1 to AT&T's new notes

Moody's Investors Service said it assigned a Baa1 rating to AT&T Inc.'s proposed senior unsecured debt offering.

Moody's expects AT&T to use the proceeds for general corporate purposes, including funding a portion of the cash consideration of its proposed acquisition of Time Warner Inc. (Baa2, stable).

In connection with Moody's ongoing ratings review of AT&T, the Baa1 ratings assigned have also been placed on review for downgrade.

In October of 2016, Moody's placed AT&T's Baa1 senior unsecured rating on review for downgrade following the company's announcement of its intent to purchase Time Warner for $85.5 billion. Moody's said its review will focus on AT&T's pro forma capital structure and its willingness and ability to reduce leverage back toward 3x (Moody's adjusted), AT&T's current limit for its Baa1 rating.

Moody’s said the review will also consider AT&T's free cash flows, its liquidity and the degree of subordination in the consolidated post-close capital structure (giving AT&T a reasonable timeframe to remedy the structural issue created by assumed debt).

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