KBRA assigns a long-term rating of AAA to the Commonwealth of Massachusetts Dedicated Transportation Revenue Bonds, 2026 Series A. KBRA additionally assigns a long-term rating of AAA to the Commonwealth’s Federal Highway Grant Anticipation Notes, 2026 Series A. The rating Outlook for each obligation is Stable.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

  • Pledged Commonwealth revenues are broad, resilient, and benefit from the strong diversity, wealth, and growth of the underlying economy.

  • Additional bonds tests are conservative relative to the volatility of pledged Commonwealth receipts.

  • Legal protections insulate bondholders from the Commonwealth’s operating budget by requiring that pledged Commonwealth revenues must be used to pay debt service before being made available for any other purpose.

  • The GAN structure benefits from a clearly defined Commonwealth revenue backstop that supplements FHRs and provides strong dual-source security.

Credit Challenges

  • The Legislature retains the ability to increase the DHEISRA or establish additional senior statutory allocations, which could reduce the cushion between total surtax collections and the $550 million DTISRA. This risk is mitigated by the Commonwealth’s covenant not to reduce the DTISRA below current level while DTR Bonds remain outstanding and by its broader non-impairment covenant.

Rating Sensitivities

For Upgrade

  • Not applicable.

For Downgrade

  • While unlikely, a substantial and sustained decline in pledged Commonwealth revenues and debt service coverage.

To access ratings and relevant documents, click here.

Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1017429

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