KBRA Assigns Ratings to Commonwealth of Massachusetts Dedicated Transportation Revenue Bonds, 2026 Series A (AAA) and Federal Highway Grant Anticipation Notes, 2026 Series A (AAA)

8 Oct 2026 | New York

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

Public Finance: U.S. Special Tax Revenue Bond Rating Methodology