OREANDA-NEWS. Fitch Ratings has affirmed the 'AA+' rating on the following Commonwealth of Massachusetts special obligation bonds:

--\\$211 million outstanding special obligation (highway) revenue bonds consolidated loan of 2002, series A and consolidated loan of 2005, series A.

The Rating Outlook is Stable.

SECURITY
The bonds are special, limited obligations of the commonwealth of Massachusetts, payable from 6.86 cents of the commonwealth's 24-cent gas tax, which is credited to the Commonwealth Transportation Fund (formerly the highway fund) under a 1994 trust agreement.

KEY RATING DRIVERS

SOLID DEBT SERVICE COVERAGE: Pledged revenues provide solid debt service coverage and a closed lien protects against dilution of coverage.

DEDICATED REVENUE SOURCE WITH LIMITED GROWTH POTENTIAL: The pledged motor fuels excise tax has shown relative stability over time. However, Fitch believes the revenue stream has limited growth potential.

STRONG AND WEALTHY ECONOMY: Massachusetts has a broad and diverse economy with the second highest personal income per capita in the nation.

RATING SENSITIVITIES

DEBT SERVICE COVERAGE: The rating is sensitive to the performance of pledged revenues and the resulting strength of debt service coverage.

CREDIT PROFILE
The commonwealth sold five issues of special obligation bonds under a 1994 trust agreement that are secured by a lien on a specified portion of the motor fuels excise (gas) tax. The last series of bonds under the 1994 trust agreement was issued in 2005, and in 2009 the commonwealth passed a transportation reform act that created a separate fund (the Commonwealth Transportation Fund, or CTF) to be used exclusively for transportation-related purposes. In December 2010, the commonwealth issued the first series of bonds backed by CTF revenues (not rated by Fitch) and at the same time closed the 1994 trust agreement to further issuance of debt, except for refundings that do not increase debt service in any year. The outstanding 1994 trust agreement bonds fully mature in fiscal 2023.

The pledged 6.86 cents of the gas tax is required to be deposited monthly into the CTF. Debt service moneys are fully accumulated for the subsequent six-month required payments. Highway revenues are constitutionally pledged to transportation purposes, and debt service is a first claim on pledged revenues, with excess funds unable to be used for any transportation purpose until appropriation of sufficient debt service is made.

Coverage of maximum debt service by pledged revenues is solid at 3.7x based on fiscal 2014 revenues.