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Rating Action:

Moody's assigns Aaa to $450M Massachusetts CTF bonds; outlook stable

22 Oct 2015

Aaa rating applies to $2.0B of outstanding CTF bonds

New York, October 22, 2015 --

Moody's Rating

Issue: Commonwealth Transportation Fund Revenue Bonds (Rail Enhancement Program) Series 2015A; Rating; Aaa; Sale Amount: $450,000,000; Expected Sale Date: 11-05-2015; Rating Description: Special Tax: Transportation-Related

Opinion

Moody's Investors Service has assigned a Aaa rating to the Commonwealth of Massachusetts' $450 million Commonwealth Transportation Fund (CTF) Revenue Bonds (Rail Enhancement Program) Series 2015A. We maintain Aaa ratings on the commonwealth's outstanding CTF debt, which post-sale will total $2 billion. The bonds are scheduled to price November 5, 2015.

SUMMARY RATING RATIONALE

The Aaa rating reflects strong bondholder protections that include a four times additional bonds test; four times non-impairment covenant; good historical performance of the pledged revenue sources and strong coverage of maximum annual debt service. The rating also reflects the need for the pledged revenues to be appropriated annually for debt service, balanced by a mechanism that prohibits their use for any purpose unless that appropriation is made, and the segregation of the pledged revenues from general obligation bondholders.

OUTLOOK

The outlook for the Commonwealth of Massachusetts' Commonwealth Transportation Fund bonds is stable, reflecting the strong legal structure of the bonds and healthy debt service coverage.

WHAT COULD MAKE THE RATING GO DOWN

- Additional leverage or decline in the pledged revenues that materially weakens debt service coverage

- Non-appropriation of funds for debt service

OBLIGOR PROFILE

The Commonwealth of Massachusetts has a population of 6.7 million people and a gross state product of approximately of over $420 billion. The state is economically well diversified and has very high wealth levels.

LEGAL SECURITY

The CTF Bonds are special limited obligations of the commonwealth and are payable solely from the pledged revenues, which are primarily comprised of Motor Fuel Taxes and Registry Fees.

USE OF PROCEEDS

Proceeds of the new bonds will be used to help finance rail improvement projects in Boston (Aaa stable), including an extension of the Massachusetts Bay Transportation Authority's (senior sales tax revenue bonds Aa2 stable) Green Line subway line, new rail cars for the Orange and Red Lines and improvements to the Fairmount rail line and South Station passenger rail hub. Other statewide projects include the beginning phase of the South Coast rail extension project, along with the realignment of the Amtrak (A1 stable) Vermonter line and other improvements in the state's Knowledge Corridor.

RATING METHODOLOGY

The principal methodology used in this rating was US Public Finance Special Tax Methodology published in January 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Genevieve Nolan
Vice President - Senior Analyst
Public Finance Group
Moody's Investors Service, Inc.
100 N Riverside Plaza
Suite 2220
Chicago, IL 60606
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Nicholas Samuels
VP - Sr Credit Officer/Manager
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Aaa to $450M Massachusetts CTF bonds; outlook stable
No Related Data.
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