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MOODY'S ASSIGNS 'A1' RATING TO MASSACHUSETTS TURNPIKE AUTHORITY'S REVENUE BONDS

 NEW YORK, Feb. 23 /PRNewswire/ -- Effective today, Moody's Investors Service assigned an 'A1' rating to Massachusetts Turnpike Authority's $370,790,000 turnpike revenue bonds, 1993 Series A scheduled to sell through negotiation the week of March 1.
 Established in 1952 as an independent state authority, the Massachusetts Turnpike Authority operates a mature toll highway system which is a primary route in both the state and New England transportation networks. Broad public acceptance and lack of competition have supported positive trends in system usage and revenues since the initial portion of the turnpike opened in 1957. Strong management and toll rate setting autonomy, which has isolated the system from Commonwealth fiscal affairs to date, have contributed to well maintained financial operations and historically sound debt service coverage levels. These factors, which are recognized in the confirmation of the 'A1' rating on debt outstanding under the 1962 indenture, are also reflected the 'A1' rating assigned to the debt currently issued under the 1993 indenture.
 The structure of the current bond sale is unusual. Under the 1993 indenture, the net system revenues pledged as security will not be available to pay debt service on the 1993 bonds until debt issued under the 1962 indenture has been redeemed in advanced of scheduled maturity; interest on the current bonds will be capitalized through 1996. The authority currently has $100.8 million of debt outstanding under the 1962 ine?nture, $23.2 million of which will be refunded by the current issue. Satisfactory covenants are in place to ensure the full and timely redemption of the remaining $77.6 million of prior lien bonds. The covenants require the Authority to take action as may be necessary on June 30, 1996, including adjusting rates and authorizing the issuance of refunding bonds, if sinking fund deposits cannot provide sufficient funds to redeem the prior lien bonds by Feb. 1, 1997.
 The current issue will fund a portion of an aggressive five year, $505 million reconstruction and improvement program focused on the rehabilitation of the system's aging facilities. The balance of project costs will be financed by available system revenues. Debt service coverage projections, based on a traffic consultant's revenue and traffic forecasts, are satisfactory, despite the substantial increase in the Authority's debt level. Projected debt service coverage remains adequate even when more conservative net revenue assumptions are made.
 Legislation has been proposed in recent years which, if enacted, would have reduced the Authority's autonomy and narrowed financial margins by redirecting the system's considerable revenue-generating capabilities to other state transportation purposes. Furthermore, the governor has contested the need for, and legality of the current bond sale. A June 1992 opinion by the Commonwealth Attorney General stated that the Authority is within its rights in issuing the current bonds. To date, no legislation aimed at restricting the authority's powers or its autonomy has passed. Moody's will continue to assess any relevant law upon passage for potential impact on credit quality.
 -0- 2/23/93
 /CONTACT: Ann Weiler, analyst, New England Ratings Group, 212-553-4429, or Joan Dougherty, vice president and manager, New England Ratings Group, 212-553-7737, both of Moody's/


CO: Massachusetts Turnpike Authority ST: Massachusetts IN: SU: RTG

AH-TS -- NY079 -- 9546 02/23/93 15:48 EST
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Publication:PR Newswire
Date:Feb 23, 1993
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