Fitch to Confirm S-T 'F1+' Rating on Commonwealth of MA GO Refunding VRDBs 2001 Ser C

NEW YORK--()--On the effective date of April 17, 2014, Fitch Ratings will confirm the short-term rating of 'F1+' assigned to the $248,115,000 ($243,550,000 currently outstanding) the Commonwealth of Massachusetts (the Commonwealth) general obligation refunding bonds (variable rate demand bonds) 2001 series C. The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by State Street Bank and Trust Company (State Street Bank, rated 'A+/F1+', Positive Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), with a revised substitute SBPA also to be issued by State Street Bank; and (ii) the mandatory tender of the bonds, which will occur on April 17, 2014.

KEY RATING DRIVERS:

On the effective date, the short-term 'F1+' rating will be based on the liquidity support provided by State Street Bank, in the form of a substitute SBPA, as well as on the strong credit quality of the Commonwealth's general obligation (GO) bonds, to which its full faith and credit are pledged (currently rated 'AA+', Stable Outlook). The substitute SBPA continues to cover the principal component of purchase price and the Commonwealth continues to be obligated to pay the interest component of purchase price in the case of a failed remarketing.

As mentioned above, the substitute SBPA provides for the payment of the principal component of purchase price, and the Commonwealth is obligated to pay the interest component of purchase price, for tendered bonds during the daily and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire upon the earliest of: April 17, 2017, the stated expiration date, unless such date is extended; conversion to a mode other than the daily or weekly rate mode; or upon the occurrence of certain other events of default which result in a mandatory tender or other termination events related to the credit of the Commonwealth's GO bonds which result in an automatic and immediate termination. The short-term 'F1+' rating will expire on the expiration or prior termination of the SBPA. A mandatory tender of the bonds is scheduled to occur on the SBPA substitution date on April 17, 2014. The remarketing agent for the bonds continues to be Morgan Stanley & Co. Incorporated.

For more information on the long-term rating, see the press release dated March 13, 2014, 'Fitch Rates $250MM Commonwealth of Massachusetts GO MassDirect Notes 'AA+', available on Fitch's website at www.fitchratings.com.

RATING SENSITIVITIES:

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support, and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the Commonwealth's GO bonds. The long-term rating is exclusively tied to the creditworthiness of the Commonwealth's GO bonds and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 24, 2014;

--'U.S. State Government Tax-Supported Rating Criteria', Aug. 14, 2012;

--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support', Jan. 27, 2014.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

U.S. State Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686033

Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730736

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Kasia Reed, +1 212-908-0500
Analytical Consultant
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Trudy Zibit, +1 212-908-0689
Managing Director
or
Committee Chairperson
Linda Friedman, +1 212-908-0727
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Kasia Reed, +1 212-908-0500
Analytical Consultant
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Trudy Zibit, +1 212-908-0689
Managing Director
or
Committee Chairperson
Linda Friedman, +1 212-908-0727
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com