Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS Aa1/P-1 RATING TO $101.7 MILLION OF UNIVERSITY OF MASSACHUSETTS BUILDING AUTHORITY WINDOWS RATE MODE BONDS BACKED BY COMMONWEALTH OF MASSACHUSETTS' FULL FAITH AND CREDIT PLEDGE

27 May 2011

$139.3 MILLION OF UMBA DEBT OUTSTANDING WITH COMMONWEALTH GUARANTY

Massachusetts (Commonwealth of)
State
MA

Moody's Rating

ISSUE

RATING

Refunding Revenue Bonds, Senior Series 2011-2 (7 Month Window) (Commonwealth Guaranteed)

Aa1/P-1

  Sale Amount

$101,700,000

  Expected Sale Date

06/09/11

  Rating Description

General Obligation

 

Opinion

NEW YORK, May 27, 2011 -- Moody's Investors Service has assigned a Aa1/P-1 rating to the University of Massachusetts Building Authority's (UMBA) $101.7 million Refunding Revenue Bonds, Senior Series 2011-2 (7 Month Window) (Commonwealth Guaranteed). Proceeds of the bonds, scheduled to price on June 9, will be used to refund UMBA's Series 2008-4 variable rate demand bonds.

SUMMARY RATING RATIONALE

The long-term rating reflects the Commonwealth of Massachusetts' full faith and credit general obligation pledge to support payment of principal and interest on the bonds, if necessary. The commonwealth's general obligation rating reflects its demonstrated willingness to cut spending and raise revenues to close budget gaps, a large and high wage education and health care sector that has helped to mitigate job losses during the economic downturn, and debt levels that are among the highest in the nation. For our full discussion of Massachusetts' long-term credit quality, please see our report dated May 20, 2011. The short-term P-1 rating is based on Moody's market access approach to longer-term variable rate instruments and reflects our estimation of the commonwealth's obligation and ability to pay the purchase price of a mandatory tender when due at the end of the mandatory tender "window."

Commonwealth Credit Strengths:

-- Effective financial management during economic downturns, particularly a willingness to promptly identify and close budget gaps through both new revenues and expenditure reductions

-- Budget reserves that still provide an adequate cushion, although a reduced one, and a statutory mechanism to replenish them going forward

-- High wealth and high levels of educational attainment

-- The presence of large, highly-rated higher education and health care institutions in the Boston area has lent a degree of economic stability and has mitigated some job losses during recessions

Commonwealth Credit Challenges:

-- Managing expenditure pressures, especially from health care and social services, in a lower revenue environment, although tax? collections have begun to improve

-- High unemployment persists, although at lower levels than the nation and employment has begun to grow slowly

-- Low pension funding levels, and debt ratios that are among the highest in the nation

DETAILED CREDIT DISCUSSION

LONG-TERM RATING DERIVED FROM COMMONWEALTH'S GENERAL OBLIGATION GUARANTY OF A PORTION OF UMBA BONDS

While UMBA is legally obligated through the master trust agreement and a contract between it, the University of Massachusetts (Aa2 rating) and the Commonwealth of Massachusetts to pay debt service on the bonds from its own resources first, the long-term rating is derived from the general obligation rating of the commonwealth. Pursuant to statute, UMBA is authorized to have $200 million of bonds outstanding at any time with payment of principal and interest guaranteed by the full faith and credit general obligation pledge of the commonwealth; as of December 31, 2010, UMBA had $139.3 million of such bonds outstanding..

P-1 RATING FOR WINDOWS MODE BONDS REFLECTS EXPECTED MARKET ACCESS

The bonds will be issued in the Windows Rate mode and will bear interest at a rate equal to SIFMA plus a spread to be set at pricing; the P-1 rating covers only the Windows mode. Bondholders may optionally tender their bonds at any time. Following notification of a tender, the remarketing agent will attempt to remarket the bonds for a period of thirty days and to pay the purchase price of the optional tender from remarketing proceeds only. There is no external bank liquidity support. If the remarketing fails and there are inadequate remarketing proceeds to cover tendered bonds, no Event of Default will be triggered, but all bonds outstanding will be subject to a mandatory tender 180 days (six months) from the end of the original 30-day remarketing period (the "Windows Mandatory Tender Date").

During the subsequent six-month period, UMBA can convert the bonds to a different adjustable rate mode or a fixed rate mode to attempt to remarket the bonds, or plan and execute a refunding, or pay off the bonds with its own liquidity. UMBA and ultimately the commonwealth are legally obligated to pay the full purchase price of the bonds on the Windows Mandatory Tender date in the event that they are not remarketed or redeemed during the full seven month remarketing period. The series resolution requires that UMBA first use its own resources to pay the purchase price (for our full description of UMBA's credit quality, please see our report dated May 26). Available resources also include a debt service reserve required to be maintained by the guaranty statute and the master trust that UMBA began to fund with issuance of the Series 2008-4 bonds; annually since then, UMBA has deposited one-twelfth of maximum annual debt service into the fund. To provide advance notice of the possibility of drawing on the commonwealth's guarantee, a side memorandum between UMBA and the commonwealth, requires UMBA to notify the commonwealth's secretary of administration and finance if, following an optional tender, the bonds have not been remarketed after the 30-day period. UMBA's debt management policy also requires notification to the commonwealth, as well as regular reports on the status of outstanding commonwealth guaranteed debt.

Moody's P-1 rating reflects the likelihood of payment full purchase price on the Windows Mandatory Tender Date. The 30-day remarketing period following an optional tender and 210-day period before the mandatory tender provide sufficient timing for UMBA and the commonwealth to evaluate and implement a refinancing. Adequate policies are in place both to execute a refinancing and to implement the commonwealth's general obligation pledge, if necessary. The expectation of market access is supported by the Commonwealth of Massachusetts' credit quality and its long record of successful market participation: the commonwealth has accessed the capital markets more than 70 times since 2000.

Outlook

The outlook for the Commonwealth of Massachusetts is stable, reflecting improving revenues and efforts to regain structural budget balance. The outlook also reflects our expectation that the commonwealth will continue to take proactive measures to close budget gaps if they emerge, and that Massachusetts will again rebuild reserves as the economy recovers. Going forward, heavy reliance on one-time budget solutions, tighter cash margins, unexpectedly severe economic deterioration, or a large increase in tax-supported debt could weaken the commonwealth's credit profile.

What would make the rating change - UP

-- Rapid rebuilding of reserves and establishment of stronger constraints on their use

-- Established trend of structural budget balance

-- Reduced debt ratios relative to Moody's 50-state median

What would make the rating change - DOWN

-- Protracted structural budget imbalance driven by deeper and/or prolonged economic downturn

-- Depletion of Budget Stabilization Fund to inadequate levels

-- Increased leveraging of the commonwealth's resources to pay debt service or further erosion in pension funding ratios

-- Narrowed cash flow that strains the commonwealth's liquidity

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Moody's State Rating Methodology published in November 2004.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information and confidential and proprietary Moody's Analytics information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Nicholas Samuels
Analyst
Public Finance Group
Moody's Investors Service

Nicole Johnson
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS Aa1/P-1 RATING TO $101.7 MILLION OF UNIVERSITY OF MASSACHUSETTS BUILDING AUTHORITY WINDOWS RATE MODE BONDS BACKED BY COMMONWEALTH OF MASSACHUSETTS' FULL FAITH AND CREDIT PLEDGE
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com