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���������ֳ� - New York - 15 May 2025: ���������ֳ� has assigned a 'AAA' rating to $130.7 million of senior sales tax bonds, 2025 series A, to be issued by the Massachusetts Bay Transportation Authority (MBTA).

The bonds will sell by competitive bid on or May 21, 2025. Bond proceeds will refund outstanding bonds.

���������ֳ� has also affirmed the rating on outstanding senior sales tax bonds issued by the MBTA at 'AAA'.

The Rating Outlook is Stable.

The 'AAA' rating on the MBTA's senior dedicated sales tax bonds reflects the strong standalone credit quality of the dedicated portion of the commonwealth's sales tax allocated to the authority. The rating incorporates leverage limitations that provide structural resilience, in light of a sizable ongoing borrowing program and relatively strong revenue growth. The bonds are insulated from both the operations of the MBTA and the commonwealth, allowing for a rating distinct from MBTA operations and linked to, but not capped by, the commonwealth's 'AA+' Issuer Default Rating (IDR).

���������ֳ� views the statute and bond documents as meeting the conditions necessary for it to rate a dedicated tax security above the commonwealth IDR. This assessment is based on the narrow nature of the statutory dedication, the specific purpose of the borrowing program, and the use of residual revenues for MBTA capital and operating expenses.

Dedicated Tax Security

The bonds are paid from a dedicated sales tax that is equal to the greater of either a base revenue amount (BRA), that is $1.2 billion in fiscal 2026 and increases with inflation, up to 3%, and cannot be reduced, or the dedicated sales tax revenue amount (DSTRA) which is 1% of the 6.25% commonwealth sales tax, excluding meals, plus an additional $160 million annually. The lien on the pledged revenues is prior to the payment of operating expenses and is not contingent upon the authority's provision of transportation services. The bonds are further backed by assessments levied on municipalities in the MBTA service area after payment of debt service on separately secured assessment bonds.

Dedicated Tax Key Rating Drivers

Performance of the dedicated sales tax securing the senior lien bonds is strong. Pledged revenues are likely to continue increasing at a rate equal to, or greater than that of national GDP growth, reflecting the broad nature of the sales tax and the fundamental strength of the commonwealth's economy, which is supportive of the 'aaa' growth prospects assessment.

While the structure benefits from a revenue floor provided by the Base Revenue Amount (BRA), sales tax revenues are economically sensitive and will fluctuate with the economy and could decline to that floor. Given the leverage limitation of the 2x maximum annual debt service (MADS) additional bonds test (ABT), the senior lien bond structure provides substantial cushion to address both a moderate downturn scenario and one equivalent to the largest historical decline, warranting the 'aaa' assessment for resilience.

Dedicated revenues are segregated from the commonwealth general fund and do not require legislative appropriation, allowing the rating to be linked to, but not capped by, the commonwealth IDR. Linkage of the bond rating with the IDR is derived from the commonwealth's levying and collection of the tax and its ability to change the tax base, which it has done in the past. The rating is not linked to the credit quality of the MBTA, as revenues are not exposed to MBTA operations. Strong legal covenants protect against diversion of revenues or lowering of the tax rate, although the tax base can be changed.

Dedicated Tax Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

-- A longer-term slowing of dedicated revenue growth to below long-term inflation, reflecting erosion of the tax base and lowered expectations for long-term economic gains that result in coverage of maximum leverage closer to 1.3x.
-- Negative rating action on the commonwealth's 'AA+'/Stable IDR, although the rating on the senior lien bonds would not automatically move as the result of an IDR downgrade.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

-- Not relevant with a 'AAA' rating.

PROFILE

The commonwealth has a broad and wealthy economy. Education levels are high and, although population growth is below the U.S. average, it is strong for the Northeast region. The strength of the commonwealth's healthcare, technology and education sectors has supported GDP growth comparable with the nation's over time and leaves it well positioned for solid future gains. Measured by per-capita personal income, Massachusetts is the second wealthiest state in the nation.

Additional Security Details

The bonds are further backed by excess revenues from the MBTA's separately secured assessment bonds available to cure any deficiencies in the dedicated sales tax bond structure. The assessment bonds are rated 'AAA' by ���������ֳ� under its "State Revolving Fund and Municipal Finance Pool Program Rating Criteria." (See "���������ֳ� Rates MA Bay Trans Auth's Assessment Revs Series 2022 'AAA'; Outlook Stable" (March 2022) at .)

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

���������ֳ� does not provide ESG relevance scores for the MBTA sales tax bonds.

In cases where ���������ֳ� does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, ���������ֳ� will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. For more information on ���������ֳ�'s ESG Relevance Scores, visit /topics/esg/products

Additional information is available on

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

• FAST Econometric API - ���������ֳ� Analytical Stress Test Model, v3.1.0 (1)

ADDITIONAL DISCLOSURES

• Dodd-Frank Rating Information Disclosure Form
• Solicitation Status
• Endorsement Policy

ENDORSEMENT STATUS