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MOODY'S ASSIGNS RATING OF 'A' TO MASSACHUSETTS SPECIAL OBLIGATIONS AND CONFIRMS 'Baa' RATING FOR GENERAL OBLIGATIONS

MOODY'S ASSIGNS RATING OF 'A' TO MASSACHUSETTS SPECIAL OBLIGATIONS
 AND CONFIRMS 'Baa' RATING FOR GENERAL OBLIGATIONS
 NEW YORK, June 2 /PRNewswire/ -- Moody's Investors Service has assigned a rating of 'A' to a Commonwealth of Massachusetts offering expected next week of approximately $100 million special obligation revenue bonds, 1992 series A. Moody's has also confirmed the 'Baa' rating assigned to the Commonwealth's general obligation bonds in connection with the sale, expected in the same week, of approximately $250 million general obligation bonds consolidated loan of 1992, series A and series B.
 The first offering of special obligation revenue bonds is secured by a pledge of amounts equal to collections from two cents per gallon of the state's gasoline excise tax. Expenditure from pledged amounts to pay debt service is subject to legislative appropriation, but the trust agreement relating to these bonds requires that all pledged amounts collected be paid to the trustee and not made available to the state for other purposes until a legislative appropriation for debt service is in effect; this feature provides adequate incentive to appropriate.
 Satisfactory coverage of debt service requirements by a relatively stable revenue source, coupled with adequate security features -- including insulation of the pledged revenue stream from the Commonwealth's financial problems -- provides upper medium grade security.
 Security for the Commonwealth's general obligation bonds continues to be influenced by efforts in the last year to address underlying budgetary imbalance, offering the prospect of greater financial stability in the future. These efforts include the enactment of a fiscal 1992 budget based on conservative revenue assumptions, initiatives seeking to achieve long-term savings through changes in operating and capital programs, and development of a consensus revenue-estimating process.
 Subsequent increases in this year's revenue estimate for the Commonwealth, which stand in contrast to a pattern of shortfalls in most other states, are evidence of the initial benefits produced by these efforts. Another positive development is a change in the focus of debate over fiscal issues now taking place, one which raises policy questions of which services to deliver and how to set priorities among them, rather than simply how to match revenues to expenditures. But even though fiscal 1992 is now expected to end with positive budgetary fund balances, these will likely be reduced from the prior-year level, as expected at the time of budget enactment.
 Risks to financial improvement are still posed by economic stress, continuing spending pressures and the uncertainty of savings expected from program changes.
 Key general obligation rating considerations in coming months will be the achievement of balanced results, now expected for this year, and the enactment of a sound budget for fiscal 1993.
 COMMONWEALTH OF MASSACHUSETTS
 Commonwealth of Massachusetts general
 obligation bonds outstanding, including
 current offering: $8,192,827,000
 Commonwealth of Massachusetts net
 tax-supported debt, including
 current offerings: $10,474,466,000
 -0- 6/2/92
 /CONTACT: George Leung, 212-553-0342, or Steve Hochman, 212-553-0338, both of Moody's/ CO: ST: Massachusetts IN: SU: RTG


SH-TQ -- NY046 -- 6294 06/02/92 15:02 EDT
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Publication:PR Newswire
Date:Jun 2, 1992
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