OREANDA-NEWS. Fitch Ratings has assigned a rating of 'AA+' to bank bonds corresponding to the following series of commonwealth of Massachusetts general obligation (GO) bonds:

--\$200,000,000 GO bonds, Central Artery/Ted Williams Tunnel Infrastructure Loan Act of 2000 (variable rate demand bonds) series A;
--\$75,590,000 GO bonds, Central Artery/Ted Williams Tunnel Infrastructure Loan Act of 2000 (variable rate demand bonds) series B.

The rating is being assigned in conjunction with the substitution of a standby bond purchase agreement (SBPA) with Bank of America, N.A. Based on a review of the terms governing the bank bonds, it is Fitch's opinion that the incremental risk associated with bank bonds does not have a material impact on the long-term credit rating of the bonds.

The Rating Outlook is Stable.

SECURITY

The bonds are general obligations of the commonwealth, to which its full faith and credit are pledged.

KEY RATING DRIVERS

STRONG AND WEALTHY ECONOMY: Massachusetts has a broad and diverse economy with the second-highest per capita personal income in the nation. Employment growth is solid, education levels are high, and population growth has approximated that of the U.S. this decade, a marked improvement from historical experience and the performance of other states in the region.

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' liability 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.

RATING SENSITIVITIES

The rating is sensitive to shifts in fundamental credit characteristics including the commonwealth's commitment to strong financial management practices.

CREDIT PROFILE

Massachusetts' 'AA+' GO rating reflects considerable economic resources and a record of prudent financial management. Credit strengths are tempered by a comparatively heavy direct liability burden that Fitch expects to remain high. The Stable Outlook reflects the expectation that the commonwealth will continue to act as needed to ensure budget balance and maintain an adequate budgeted reserve position.