KBRA Assigns AAA Rating to Commonwealth of Massachusetts - Commonwealth Transportation Fund Revenue Bonds; Affirms Rating on Outstanding Bonds; Outlook is Stable
19 Sep 2025 | New York
KBRA assigns a long-term rating of AAA with a Stable Outlook to the following Commonwealth of Massachusetts bonds:
- Commonwealth Transportation Fund Revenue Bonds (Rail Enhancement Program) 2025 Series A
- Commonwealth Transportation Fund Revenue Refunding Bonds 2025 Series A
Concurrently, KBRA affirms the long-term rating of AAA with a Stable Outlook for the Commonwealth's outstanding Commonwealth Transportation Fund (CTF) Revenue Bonds.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Very broad and resilient nature of CTF pledged revenues which, to date, have generated more than 4.0x coverage of maximum annual debt service.
- Extensive legal protections that collectively and effectively insulate pledged revenues from Commonwealth budget operations.
- The Commonwealth’s diverse, wealthy, and growing economy.
Credit Challenges
- The motor fuels portion of pledged revenues (~53.3% of FY 2025 pledged revenues) is economically sensitive and vulnerable to declines during recessionary periods.
- Longer term, structural shifts in fuel consumption patterns driven by the continued phase-in of electric, hybrid, and increasingly efficiency conventional vehicles may pressure the motor fuels portion of pledged revenues.
The Stable Outlook reflects KBRA’s expectation that pledged revenues will remain resilient and are unlikely to decline significantly enough to impair coverage of debt service, even under very adverse economic conditions. Further, KBRA believes the Commonwealth has no meaningful incentive to divert or dilute the pledged revenues in ways that would be detrimental to bondholders.
Rating Sensitivities
For Upgrade
- Not applicable at AAA rating level
For Downgrade
- An unlikely scenario where there was a substantial and sustained decline in pledged revenues.
To access ratings and relevant documents, click here.