Commonwealth of Massachusetts – Grant Anticipation Notes (GANs) Rating Report

Rating Summary

The long-term rating for the Commonwealth of Massachusetts’ (the Commonwealth’s) Federal Highway Grant Anticipation Notes (GANs) reflects the dual-source nature of the security pledge, consisting primarily of certain federal reimbursements and, in the event of insufficiency, pledged Commonwealth revenues. The rating incorporates the long and consistent history of timely federal reimbursements, as well as the breadth and diversity of Commonwealth revenues pledged as a backup source of payment. Also reflected are conservative additional bonds provisions and strong legal protections that insulate pledged revenues from the Commonwealth’s operations. The Commonwealth’s strong underlying socioeconomic metrics further support the rating. Credit risks are minimal.

The currently offered GANs are the first series to be issued under a new trust agreement that continues the Commonwealth’s longstanding use of residual transportation-related revenues as a backup source of payment,…