Press Release|Public Finance
KBRA Assigns AA+ Rating to Massachusetts Bay Transportation Authority Subordinated Sales Tax Bonds 2024 Series A (USDOT Loan); Affirms AAA Rating for Senior Sales Tax Bonds
11 Dec 2024 | New York
KBRA assigns a long-term rating of AA+ to the Massachusetts Bay Transportation Authority Subordinated Sales Tax Bonds 2024 Series A (USDOT Loan) Widett Circle Preservation of Right-of-Way and Site Preparation Project (RRIF 2025-0053). KBRA additionally affirms the long-term rating of AAA for the Authority's Senior Sales Tax Bonds. The rating Outlook is Stable.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Flow of funds requiring that pledged revenues must be used to pay debt service before being made available for other purposes insulates bondholders form MBTA operations.
- Pledged revenues provide strong coverage of both senior and combined sales tax bond MADS with residual amounts providing a substantial source of recurring financial support for capital and operating needs.
- Pledged revenue volatility is limited by the base revenue amount, an inflation-adjusted floor for pledged sales tax receipts, which at $1.16 billion for FY 2024 provides coverage of 3.67x senior and 2.51x combined pro forma MADS.
- Stable demographic trends and favorable socio-economic characteristics of tax base support growth and stability of pledged receipts.
Credit Challenges
- Pledged revenues have some sensitivity to economic cycles.
Rating Sensitivities
For Upgrade
- Not applicable.
For Downgrade
- A significant decline in debt service coverage due to very large increases in sales tax bond leverage accompanied by significant and prolonged deterioration in the sales tax base.
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