Press Release|Public Finance
KBRA Assigns AAA Rating to Massachusetts Bay Transportation Authority Senior Sales Tax Bonds 2024 Series A and 2024 Series B (Sustainability Bonds); Affirms Rating for Parity Bonds
14 Jun 2024 | New York
KBRA assigns a long-term rating of AAA to the Massachusetts Bay Transportation Authority Senior Sales Tax Bonds, 2024 Series A and Senior Sales Tax Bonds, 2024 Series B (Sustainability Bonds). KBRA additionally affirms the long-term rating of AAA for parity Senior Sales Tax Bonds. The rating Outlook is Stable.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Gross lien sales tax pledge insulates bondholders from MBTA operations.
- Pledged Revenues provide strong coverage of Senior 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 3.97x Senior Lien Sales Tax Bond 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 at AAA rating level.
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.
To access rating and relevant documents, click here.