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Massachusetts (Commonwealth of) -- Moody's assigns MIG 1 to Massachusetts' Steamship Bond Anticipation Notes

·14 min read

Rating Action: Moody's assigns MIG 1 to Massachusetts' Steamship Bond Anticipation NotesGlobal Credit Research - 01 Sep 2022New York, September 01, 2022 -- Moody's Investors Service has assigned a MIG 1 rating to the Woods Hole, Martha's Vineyard and Nantucket Steamship Authority, MA's (the authority) $33 million Steamship Bond Anticipation Notes. Following the note sale, the authority will have $98.9 million in outstanding debt, including $65.9 million in long term bonds, which are rate Aa1.RATINGS RATIONALEThe MIG 1 rating reflects strong market access to repay notes with a long-term financing or with refunding notes prior to maturity, which is based on the full faith and credit backing of the Commonwealth of Massachusetts (Aa1 stable). Should the authority have insufficient funds on hand to pay debt service, it is statutorily required to certify to the state treasurer the amount required to pay principal and interest due and the commonwealth is required to pay that amount. Absent this need, debt service is expected to be paid with revenues generated by the authority.The commonwealth's Aa1 rating reflects its robust economic base, driven by social factors such as a highly educated workforce and high income levels, that support an elevated long-term liability burden. The commonwealth's reliance on economically sensitive revenues is balanced by its diverse economic base. Strong governance practices are reflected in continued stable financial performance.RATING OUTLOOKRating outlooks are not applicable to short-term ratings.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- N/AFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Multi-notch downgrade of the issuer rating of the Commonwealth of MassachusettsLEGAL SECURITYThe notes are intended to be repaid with the proceeds of bonds or refunding notes. The commonwealth of Massachusetts will cover debt service to the extent revenues are insufficient, or in this case, in the event there is a market disruption or other such event that causes a delay in refunding the notes into a long-term permanent financing.The steamship authority pays debt service on long term bonds with revenues derived from operation of the steamship facilities, including passenger and vehicle ferry service from Cape Cod to Nantucket and Martha's Vineyard islands. If authority revenues are insufficient to pay debt service or fully fund required reserves, the authority is statutorily required to certify to the state treasurer the amount required to pay principal and interest due, and the commonwealth is required to pay that amount.If the commonwealth is called on to make a debt service payment, the statute requires the amount of it to be assessed on the towns of Barnstable, Falmouth and Nantucket (Aaa stable) and the city of New Bedford (A1 stable) and the county of Dukes County in order to recover its costs. However, the commonwealth's obligation to make payment for debt service is not contingent on the successful levy or collection of assessments. No such assessments have been required nor has the commonwealth been called upon to make payments since 1962.USE OF PROCEEDSProceeds of the notes will be used to purchase and modify up to four ferry vessels to be used by the authority.PROFILEThe Commonwealth of Massachusetts is the 15th largest state by population, with about 7 million residents as of the 2022 census. Its 2022 gross domestic product, reaching $637 billion, ranks 12th among the states. Per capita income was 130% of the national average in 2022, highest in the US.The steamship authority was created in 1960 and provides access to the islands offshore from Cape Cod. The authority's area of operations is defined by tourism, and the bulk of its revenues are earned during the summer months. The authority's enabling legislation permits the authority to have up to $100 million of bonds outstanding at any time.METHODOLOGYThe principal methodology used in this rating was Short-term Debt of US States, Municipalities and Nonprofits Methodology published in July 2020 and available at https://ratings.moodys.com/api/rmc-documents/67339. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Denise Rappmund Lead Analyst State Ratings Moody's Investors Service, Inc. 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