NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a rating of 'AA+' to the following Commonwealth of Massachusetts (the Commonwealth) general obligation (GO) bonds:
--$100 million GO bonds consolidated loan of 2006 (variable rate demand
bonds) series B,
subseries B-1;
--$100 million GO bonds consolidated loan of 2006 (variable rate demand
bonds) series B,
subseries B-2.
The Commonwealth's outstanding 2006B bonds, which have been supported by a standby bond purchase agreement with JPMorgan Chase Bank, National Association, are being split into two subseries and will be directly purchased by JPMorgan Chase Bank, National Association (subseries B-1) and TD Bank, N.A. (subseries B-2).
The Rating Outlook is Stable.
KEY RATING DRIVERS
--STRONG AND WEALTHY ECONOMY: Massachusetts has a broad and diverse economy with the second highest personal income per capita in the nation.
--PRUDENT FINANCIAL MANAGEMENT: The Commonwealth has benefited from conservative budgeting and sound financial practices over time. A limitation on the use of capital gains-related tax revenue has reduced the volatility of economically sensitive revenues in the budget, and the Commonwealth has shown a commitment to reserve funding.
--COMPARATIVELY HIGH LIABILITY BURDEN: Massachusetts' debt levels are high for a U.S. state government, and Fitch expects them to remain so. This is partially explained by the above-average role played by the Commonwealth in relation to local levels of government when compared to most other states. In addition, the Commonwealth is responsible for the pension benefits of not only Commonwealth employees but also teachers statewide, contributing to a combined burden of debt and pensions that is also well above the median for U.S. states rated by Fitch.
RATING SENSITIVITIES
The rating is sensitive to shifts in fundamental credit characteristics including the state's commitment to strong financial management practices.
CREDIT PROFILE
Fitch's 'AA+' rating on Commonwealth of Massachusetts GO debt reflects considerable economic resources and a record of prudent financial management. Credit strengths are tempered by a comparatively heavy debt burden that Fitch expects to remain high. The Stable Rating Outlook reflects the expectation that the Commonwealth will continue to act as needed to ensure budget balance and maintain an adequate budgeted reserve position.
For additional information on the GO rating of the Commonwealth of Massachusetts, see Fitch's press release 'Fitch Rates Massachusetts' $525MM GO Bonds 'AA+'; Outlook Stable', dated March 15, 2013 and available at www.fitchratings.com.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Tax-Supported Rating
Criteria', Aug. 14, 2012;
--'U.S. State Government Tax-Supported
Rating Criteria', Aug. 14, 2012.
Applicable Criteria and Related Research
Tax-Supported Rating
Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015
U.S.
State Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686033
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=791338
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