The Commonwealth of Massachusetts Rating Presentation to Moodys - PowerPoint PPT Presentation

The Commonwealth of Massachusetts Rating Presentation to Moody’s Investors Service $362.960* mm Commonwealth Transportation Fund Revenue Bonds, 2013 Series A $287.865* mm Federal Highway Grant Anticipation Notes, 2013 Series A CTF Revenue Bonds POS Link Federal Highway GANs POS Link * Preliminary, subject to change Accelerated Bridge Program Financings, 2013 Series A 1

Disclaimer This document and any other materials accompanying this document are provided for your information. The presentation is not part of the Preliminary Official Statement, and is qualified in all respects by reference to the Preliminary Official Statement. Investment decisions relating to the Bonds should only be based upon the final Official Statement when available. Neither the provision of access to this presentation nor the posting of the Preliminary Official Statement constitutes an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds described in the presentation and the Preliminary Official Statement in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The Bonds described in the presentation and the Preliminary Official Statement will not be offered or sold, whether directly or indirectly, other than to legal entities or individuals who may receive such offer or sale under applicable law. Offers to purchase the Bonds may only be made through a registered broker-dealer. The information set forth herein and in the Preliminary Official Statement has been furnished by the Commonwealth and includes information obtained from other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by, as to information from other sources, the Commonwealth. The information and expressions of opinion herein are subject to change without notice. Neither the delivery of the information nor the Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Commonwealth, or its agencies, authorities and political subdivisions, since the date hereof, except as expressly set forth herein. This presentation and the Preliminary Official Statement contains certain forward-looking statements that are subject to a variety of risks and uncertainties that could cause actual results to differ from the projected results, including without limitation general economic and business conditions, conditions in the financial markets, the financial condition of the Commonwealth and various state agencies and authorities, receipt of federal grants, litigation, arbitration, force majeure events and various other factors that are beyond the control of the Commonwealth and its various agencies and authorities. Because of the inability to predict all factors that may affect future decisions, actions, events or financial circumstances, what actually happens may be different from what is set forth in such forward-looking statements. Forward-looking statements are indicated by use of such words as “may,” “will,” “should,” “intends,” “expects,” “believes,” “anticipates,” “estimates” and others. The Commonwealth Transportation Fund Revenue Bonds , 2013 Series A Preliminary Official Statement is available at: http://www.munios.com/id.aspx?i=VQ2SN1IRe5Gp The Federal Highway Grant Anticipation Notes , 2013 Series A Preliminary Official Statement is available at: http://www.munios.com/id.aspx?i=C3WDVd8MWrFp Further information can be found at: http://www.massbondholder.com/ Accelerated Bridge Program Financings, 2013 Series A 2 2

Table of Contents 1. Introduction 3 2. Accelerated Bridge Program 6 3. Projects of Regional Significance 15 4. Revenues and Bondholder Security 21 4a. Commonwealth Transportation Fund 23 4b. Grant Anticipation Notes 35 5. Pro Forma Debt Service Coverage 38 6. Conclusion 46 7. Financing Schedule 49

1. Introduction Longfellow Bridge

The Commonwealth of Massachusetts The Commonwealth of Massachusetts Office of the Treasurer and Receiver-General MassDOT James MacDonald Colin MacNaught Delia Rissmiller Victoria Sheehan First Deputy Treasurer Asst. Treasurer, Debt Mgmt Investor Relations Manager ABP Project Manager Phone: 617-367-3900 Phone: 617-367-9333 Phone: 617-367-9333 Phone: 857-368-9285 jmacdonald@tre.state.ma.us cmacnaught@tre.state.ma.us drissmiller@tre.state.ma.us victoria.sheehan@dot.state.ma.us Executive Office for Administration and Finance 2013 GANs Bond Counsel 2013 CTF Bond Counsel Scott Jordan Lori Hindle Ken Lind John Regier Undersecretary Director Intergov’t Affairs Nixon Peabody LLP Mintz, Levin, P.C. Phone: 617-727-2040 Phone: 617-727-2040 Phone: 212-940-3005 Phone: 617-348-1720 scott.jordan@state.ma.us lori.hindle@state.ma.us klind@nixonpeabody.com jrregier@mintz.com 2013 GANs Financial Advisor 2013 GANs Senior Underwriter 2013 CTF Senior Underwriter 2013 CTF Financial Advisor Robert Rich Mark Gooding Tom Green Paul Ladd Public Financial Management Citigroup Bank of America Merrill Lynch Public Resources Advisory Group Phone: 609-452-0263 Phone: 212-380-5278 Phone: 617-346-9253 Phone: 617-350-5826 richr@pfm.com mgooding@pragny.com thomas.h.green@citi.com paul.e.ladd@baml.com Accelerated Bridge Program Financings, 2013 Series A 5 3 Introduction

Commonwealth’s Rating Objectives • Achieve the highest ratings for both of the Commonwealth’s Accelerated Bridge Program credits • Confirm the Aaa rating on the Commonwealth Transportation Fund (“CTF”) Bonds • Obtain an upgrade to Aaa on the double-barreled Accelerated Bridge Program GANs and on the prior Senior GANs  The remaining Senior GANs deserve to be upgraded to Aaa from Aa1 given their strong debt service coverage and their pending economic defeasance  All of the Senior GANs will mature on June 15, 2015, and all but one of the remaining debt service payments on these GANs have been pre-funded; the final payment will be funded on June 15, 2014 which is within the current state and federal fiscal year • With the economic defeasance of the Senior GANs, the ABP GANs effectively have a senior lien on Federal Reimbursements • The ABP GANs are further secured by a pledge of nearly $1.2 billion in annual Net CTF Pledged Funds, a second high- quality source of security fully sufficient to pay the ABP GANs even if no Federal Reimbursements were received  This Net CTF revenue pledge provides 10X or greater coverage for the ABP GANs even after full program issuance  The recent increase in the Gas Tax rate to 24 cents from 21 cents will generate an additional $95 million annually  Beginning in 2015, the Gas Tax will be indexed upward to inflation, further enhancing coverage • Both the 400% coverage required by the ABP GANs Additional Bonds Test and the Commonwealth’s 400% CTF Rates and Fees Covenant provide the highest Aaa quality security • Projected debt service coverage on the entire CTF portion of the ABP financings is estimated to be greater than 10.0x • Projected debt service coverage on the entire GANs portion of the ABP financings is estimated to be greater than 5.8x (assuming only Net Federal Highway Reimbursements) and greater than 16.2x (assuming both Net Federal Highway Reimbursements and Net CTF Pledged Funds) • Accordingly, the Accelerated Bridge Program GANs unquestionably deserve to be rated Aaa Accelerated Bridge Program Financings, 2013 Series A 6 4 Introduction

The Prior Senior GANs are Effectively Economically Defeased  The Senior GANs lien was closed to new issuance in December 2010  All of the outstanding Senior GANs are scheduled to mature on or before June 15, 2015  Since GAN debt service is pre-funded one year in advance, all but one of the remaining payments has already been pre-funded  The remaining payment will be funded on June 15, 2014, which is within the current State and Federal Fiscal Year  Debt Service for the June 15, 2015 interest payment is already budgeted in the State’s FY 2014 General Appropriation Act  MassDOT has programmed the payment of the remaining principal in full from Federal Reimbursements to be received this year  Accordingly, the Senior GANs lien is essentially economically defeased  So, the ABP GANs lien on all Federal Highway Reimbursements now is effectively a senior lien  In addition, the 10 Cents Motor Fuel Tax pledge providing the back- up “True Up” condition securing the prior Senior GANs can no longer be triggered, eliminating any potential impact from that prior lien condition as well  The Commonwealth ABP GANs principal retirement commences in 2016, after the Senior GANs’ final maturity in 2015 Accelerated Bridge Program Financings, 2013 Series A 7 5 Introduction

2. Accelerated Bridge Program Fall River Bridge