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

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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

Accelerated Bridge Program Financings, 2013 Series A

* Preliminary, subject to change

Federal Highway GANs POS Link CTF Revenue Bonds POS Link

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Accelerated Bridge Program Financings, 2013 Series A

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

• nly 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

• ffer 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
• ffer, 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/

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Table of Contents

• 1. Introduction

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• 2. Accelerated Bridge Program

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• 3. Projects of Regional Significance

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• 4. Revenues and Bondholder Security

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• 4a. Commonwealth Transportation Fund

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• 4b. Grant Anticipation Notes

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• 5. Pro Forma Debt Service Coverage

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• 6. Conclusion

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• 7. Financing Schedule

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• 1. Introduction

Longfellow Bridge

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The Commonwealth of Massachusetts

The Commonwealth of Massachusetts Colin MacNaught

• Asst. Treasurer, Debt Mgmt

Phone: 617-367-9333 cmacnaught@tre.state.ma.us

James MacDonald First Deputy Treasurer Phone: 617-367-3900 jmacdonald@tre.state.ma.us

Delia Rissmiller Investor Relations Manager Phone: 617-367-9333 drissmiller@tre.state.ma.us Victoria Sheehan ABP Project Manager Phone: 857-368-9285 victoria.sheehan@dot.state.ma.us Office of the Treasurer and Receiver-General MassDOT Lori Hindle Director Intergov’t Affairs Phone: 617-727-2040 lori.hindle@state.ma.us Scott Jordan Undersecretary Phone: 617-727-2040 scott.jordan@state.ma.us Ken Lind Nixon Peabody LLP Phone: 212-940-3005 klind@nixonpeabody.com John Regier Mintz, Levin, P.C. Phone: 617-348-1720 jrregier@mintz.com Executive Office for Administration and Finance Robert Rich Public Financial Management Phone: 609-452-0263 richr@pfm.com 2013 GANs Financial Advisor Tom Green Citigroup Phone: 617-346-9253 thomas.h.green@citi.com 2013 GANs Senior Underwriter Paul Ladd Bank of America Merrill Lynch Phone: 617-350-5826 paul.e.ladd@baml.com 2013 CTF Senior Underwriter 2013 GANs Bond Counsel 2013 CTF Bond Counsel

Accelerated Bridge Program Financings, 2013 Series A

Mark Gooding Public Resources Advisory Group Phone: 212-380-5278 mgooding@pragny.com 2013 CTF Financial Advisor

3 Introduction

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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

4 Introduction

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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

5 Introduction

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• 2. Accelerated Bridge Program

Fall River Bridge

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Commonwealth of Massachusetts Accelerated Bridge Program

• The Commonwealth is committed to the repair of structurally deficient bridges statewide through the

Accelerated Bridge Program (“ABP”)

• Chapter 233 of the Acts of 2008 established the ABP by a unanimous vote - 158-0 (House), 38-0

(Senate) - indicating strong programmatic support by the Governor and Legislature

• The Commonwealth established a new and expansive funding source for the ABP:
• Commonwealth Transportation Fund (“CTF”) authorized for ABP in 2009
• Federal Highway Grant Anticipation Notes (“GANs”) authorized for ABP in 2008 with a “double

barrel” security feature including Net CTF Pledged Funds

• Over $1.9 billion of total annual revenue is available to bondholders of ABP bonds
• Program structure provides maximum flexibility with annual analysis of ABP progress and

determination of financing options

• The 2013 Bonds represent the 3rd issue of CTF Bonds and 2nd issue of GANs under the ABP

Program, with total authorization to issue $1.876 billion CTF bonds and $1.1 billion GANs

Accelerated Bridge Program Financings, 2013 Series A

$1.28 Billion $629 Million

Over $1.9 Billion of Annual Revenue

6 Accelerated Bridge Program

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Commitment to Repair Structurally Deficient Bridges

• In 2007, the bi-partisan Massachusetts Transportation Finance Commission estimated a $15 billion

funding gap over the next 20 years to maintain the Commonwealth’s transportation infrastructure

 At that time, a funding gap of $2.4 billion was estimated for MassHighway bridges due to

inadequate resources devoted to steady-state maintenance

• In June 2008, it was estimated that there were approximately 550 structurally deficient bridges and

that, without repair, the structurally deficient count could rise to nearly 700 by 20161

• In response, the legislature authorized the Accelerated Bridge Program (“ABP”)

Accelerated Bridge Program Financings, 2013 Series A

• Accelerate future

investment capacity to fund bridge rehabilitation and prevention projects through 2016

• Authorize up to $2.98

billion in borrowing using dedicated transportation sources The Proposal

Benefits

1) Cost Savings

— Hedge against construction inflation costs — Avoid cost of deferred maintenance

2) Public Safety

— Ensure full access to hundreds of safe and functional

bridges that serve as lynchpins of the Commonwealth’s transportation system 3) Jobs and Economic Growth

— Critical infrastructure improvements are necessary to

create the conditions for long-term economic growth

— Construction will support Commonwealth employment

1 Source: Massachusetts Department of Transportation (“MassDOT”)

7 Accelerated Bridge Program

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Accelerated Bridge Program Objectives and Goals

• Through August 1, 2013 the MassDOT Accelerated Bridge Program has advertised 179 construction

projects with a combined construction budget valued at $2.16 Billion

• Safety – Improve the safety and conditions across the Commonwealth, with a focus on structurally

deficient bridges and bridges projected to be deficient through 2016, so as to reduce the number of structurally deficient bridges to 450 in 2016

• Economic Development – Create thousands of construction-related jobs and maintain the critical

infrastructure necessary for long-term economic growth of the Commonwealth

• Cost Savings – Generate significant cost savings by accelerating projects now, taking advantage of

historically low interest rates and thereby avoiding construction cost inflation and cost increases due to deterioration caused by deferred maintenance

• Strong Project Management – Complete projects on time and on budget with minimum disruption to

people and commerce

• Transparency – Conduct the ABP program with transparency and accountability by providing

frequent and detailed reports to the public on the progress of the ABP program

Accelerated Bridge Program Financings, 2013 Series A

8 Accelerated Bridge Program

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202 Active Projects Statewide

Accelerated Bridge Program Financings, 2013 Series A

9 Accelerated Bridge Program

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Improve Bridge Conditions and Complete Projects Sooner

697 511 543 436

400 450 500 550 600 650 700

ABP-ELIGIBLE STRUCTURALLY DEFICIENT BRIDGE STATUS

PROGRAM PROGRAM GOAL STRUCTURALLY DEFICIENT ABP- ELIGIBLE BRIDGES

MassDOT’s ABP Project Timeline

• Program Timeline is scheduled for completion in September 2016 and is ahead of schedule
• Construction Contract Advertisements are already 93% complete
• Construction Contracts are already 70% complete
• To date, the Accelerated Bridge Program is operating under budget and ahead of schedule

Accelerated Bridge Program Financings, 2013 Series A

10 Accelerated Bridge Program

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Stimulate Economy & Create Jobs

ABP Jobs Created or Sustained through August 1, 2013

23,026 Direct

• Est. 55,000+ Indirect

1,100 899 363 4,535 5,010 1,237

SUFFOLK

2,617 2,273 2,347 1,449 824 372

Accelerated Bridge Program Financings, 2013 Series A

11 Accelerated Bridge Program

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Complete Projects Efficiently & Innovatively

• New Technologies
• Heavy Lift
• Bridge-in-a-Backpack
• Folded Steel Plate
• NEXT Beam
• Aluminum Deck
• Existing Technologies
• Inverset
• Precast Elements
• CON/SPAN Arches
• Segmental Construction
• FRP Deck

Accelerated Bridge Construction

Accelerated Bridge Program Financings, 2013 Series A

12 Accelerated Bridge Program

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Complete Projects Efficiently & Innovatively

Accelerated Bridge Program Financings, 2013 Series A

• The Accelerated Bridge Program’s focus on innovation is gaining notoriety within the construction and

engineering communities, and MassDOT is pleased to announce that the ABP has already received several awards

13 Accelerated Bridge Program

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Project Recognitions

Accelerated Bridge Program Financings, 2013 Series A

http://www.nytimes.com/2012/04/18/us/rapid-construction-techniques-transform- infrastructure-repair.html?pagewanted=all&_r=0

Winner of 2011Bond Buyer’s ‘Deal of the Year’ Award

14 Accelerated Bridge Program

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• 3. Projects of Regional Significance

Fore River Bridge

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Key Regional Projects

• While all bridges are critical, five specific

ABP projects are significant to the region given their size and average daily traffic levels 1. Kenneth Burns Memorial Bridge

• Route 9 between Shrewsbury and

Worcester 2. Fore River Bridge

• Route 3A between Quincy and

Weymouth 3. Longfellow Bridge

• Route 3 between Boston and

Cambridge 4. Whittier Bridge/I-95 Improvements

• I-95 in Newburyport, Amesbury and

Salisbury 5. I-195/Route 79 Interchange & Braga Bridge

• Braga Bridge Interchange with Route

79 in Fall River

Accelerated Bridge Program Financings, 2013 Series A

1. 2. 3. 4. 5.

State Map of Massachusetts with Key Regional Project Locations

15 Projects of Regional Significance

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Route 9 Corridor Replacement Bridge

• Kenneth Burns Memorial Bridge
• The objective of the proposed project is to address the structural deficiencies and upgrade the

structural capacity of the bridge where appropriate

• The design will make accommodations for the sidewalk approaches to meet ADA standards
• The bridge carries an average daily traffic (“ADT”) of 47,700 vehicles, bicycles and pedestrians
• Notice to Proceed Issued: 4/30/2012
• Substantial Completion Forecast: 7/24/2015
• Contractor: The Middlesex Corp.
• To-Go Construction Contract Cost Forecast: $70,000,000

Accelerated Bridge Program Financings, 2013 Series A

16 Projects of Regional Significance

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Connecting Quincy and Boston With a New Shiplane Span

• Fore River Bridge
• The proposed project includes the replacement of the Washington Street Bridge (State Route

3A) over the Fore River in Quincy and Weymouth

• The new bridge will be a double leaf bascule or vertical lift bridge and carries an ADT of 32,000

vehicles while the Fore River Channel is a significant commercial shipping corridor

• Notice to Proceed Issued: 8/24/2012
• Substantial Completion Forecast: 8/31/2016
• Contractor: White-Skanska Koch
• To-Go Construction Contract Cost Forecast: $214,000,000

Accelerated Bridge Program Financings, 2013 Series A

17 Projects of Regional Significance

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Maintaining Key Connections between Boston and Cambridge

• Longfellow Bridge
• The Longfellow Bridge is a major transportation link between the City of Cambridge and the City
• f Boston and serves 28,600 vehicles daily, as well as bicycle and pedestrian traffic
• An additional estimated 90,000 commuters use the MBTA’s Red Line Transit Service to cross

this bridge on a transit rail line in the center of this structure

• Notice to Proceed Issued: 3/25/2013
• Substantial Completion Forecast: 9/30/2016
• Contractor: White-Skanska-Consigli
• To-Go ABP Construction Contract Cost Forecast*: $277,000,000

Accelerated Bridge Program Financings, 2013 Series A

*Project has a To-Go Other Funding Construction Contract Cost Forecast of $5,100,000 (Non-ABP Funding) 18 Projects of Regional Significance

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Maintaining Our Massachusetts Gateway to Maine

• Whittier Bridge/I-95 Improvements
• The existing 6-lane bridge will be replaced with a new 8 lane structure matching the existing 8-

lane roadway cross section to the south

• The bridge carries an ADT of 70,000 vehicles
• The bridge will remain open to traffic throughout construction
• Notice to Proceed Issued: 4/16/2013
• Substantial Completion Forecast: 8/6/2016
• Contractor: Walsh-McCourt
• To-Go Construction Contract Cost Forecast: $288,000,000

Accelerated Bridge Program Financings, 2013 Series A

19 Projects of Regional Significance

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Enhancing Fall River Transportation Flows

• I-195/Route 79 Interchange & Braga Bridge
• Work on this project consists of reconfiguration of the Route I-195/Route 79/Route 138

interchange including all ramps and associated bridges

• The ADT on Route 79 is approximately 40,000 while the ADT for I-195 is 88,000 vehicles
• Regional connectivity will be maintained while improving local access
• Notice to Proceed Issued: 8/26/2013
• ABP Substantial Completion Forecast: 9/30/2016 (ABP Route I-195/Route 79 Interchange)
• Contractor: Barletta Heavy/O&G
• To-Go ABP Construction Contract Cost Forecast*: $137,000,000

Accelerated Bridge Program Financings, 2013 Series A

*Project has a To-Go Other Funding Construction Contract Cost Forecast of $87,000,000 (Non-ABP Funding) 20 Projects of Regional Significance

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• 4. Revenues and Bondholder Security

Fore River Bridge

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Summary Details of CTF and GANs Credit

Accelerated Bridge Program Financings, 2013 Series A

Commonwealth Transportation Fund (CTF) Strong debt service coverage Strong Additional Bonds Test Diverse and stable revenue stream Diverse revenue collection: daily (Registry Fees) and monthly (Gas Tax) deposit of pledged revenues with bond trustee The increased gas tax will generate $95 million a year in increased CTF Fund Pledged Revenues Advanced monthly funding of principal and interest on accelerated 1/10th and 1/5th basis State constitutional dedication of CTF revenues to transportation purposes Commonwealth non-impairment covenant and covenant to maintain CTF rates and fees requiring at least 4x MADS coverage Grant Anticipation Notes (GANs) Closed senior lien with final payment this State fiscal year and federal fiscal year Two pronged Additional Bonds Test providing 4.0x MADS coverage “Double-Barrel” pledge of nearly than $1.2 billion in annual Net CTF Pledged Funds Strong debt service coverage Requirement in both 1998 and 2010 Trust Agreements that debt service payments be funded with the trustee a year in advance Long history of low volatility in federal transportation funding

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Additional Bonds and the Commonwealth’s Rate Covenants

Commonwealth Transportation Fund (CTF)

• Additional Bonds Test
• Over 4.0x maximum aggregate annual

Adjusted Bond Debt Service Requirement

• Commonwealth Rate Covenants
• Trust Agreement does not allow the

Commonwealth to change the rate of the Registry Fees or the Motor Fuels Tax unless Net Pledged Revenues exceed 4.0x MADS coverage

• No Pledged Funds may be applied to “any
• ther use” until appropriation has been

made sufficient to pay principal and interest

• Article 78 – State Constitution requires all

revenue from vehicle, fuel and license fees be used for highway purposes only

• Other budgetary uses of the pledged

revenues are subordinate to debt service and serve as a natural means of preventing

• ver leveraging of the program

Grant Anticipation Notes (GANs)

• Additional Bonds Test
• Federal Highway Reimbursements

exceeded 1.5x max Adjusted Note Debt Service Requirement; PLUS

• Net CTF Pledged Funds exceeded 2.5x

max annual aggregated Adjusted Note Debt Service Requirement

• Total of 4.0x ABT on a Federal Highway

GANs Program

• Commonwealth Rate Covenants
• If Federal Highway reimbursements are

not sufficient to pay debt service on GANs, Net CTF Pledged Funds to be appropriated, as per the Trust Agreement

• No Pledged Funds may be applied to “any
• ther use” until appropriation has been

made sufficient to pay principal and interest

Accelerated Bridge Program Financings, 2013 Series A

22 Revenues and Bondholder Security

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• 4a. Commonwealth Transportation Fund

Kenneth F. Burns Bridge

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 The CTF Bonds have exceptionally strong AAA quality credit features, beginning with massive projected coverage from a diverse revenue stream combining six distinct revenue sources generating in excess of $1.2 billion in pledged funds annually, with the added protection of a strong 4.0x ABT  The prior Motor Fuel Tax lien is closed  The CTF credit was further bolstered in 2013 by a 3 cent increase in the gas tax to 24 cents, with upward indexing beginning in 2015 which is a result of strong legislative support  DOR estimates the 3 cents will generate $95 million a year in increased CTF Fund Pledged Revenues  The CTF is one of the Commonwealth’s two major budgeted funds and also is segregated, both budgetarily from competing claims on its revenue stream, and constitutionally from the Article 78 state constitutional dedication of its core revenue base exclusively to transportation purposes  CTF flow of funds also is extremely strong & diverse in collection timing  Gas taxes are collected monthly and RMV fees are collected daily  The CTF Bond Trustee is required to make accelerated 1/5th, 1/10th advanced deposits to the Debt Service Fund  Additionally, the CTF Bonds are backed by two consolidated, independent and stable security sources 1) motor fuel and 2) registry fees which are really six (6) sources of security for bondholders  MassDOT’s operating agencies rely on coverage flows after debt service, offering additional security to bondholders that the CTF liens will not be over leveraged

CTF Bonds – ‘AAA’ Quality Credit Features Enhanced in 2013

Accelerated Bridge Program Financings, 2013 Series A

23 Commonwealth Transportation Fund

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CTF Pledged Funds - $1.2 Billion Annually for Debt Service

 Broad and diverse revenue stream generated from a large, statewide economic base

• Supported by deep and diverse Massachusetts economy

 Comprised of approximately 59% Motor Fuels Tax and 41% RMV Fees

• Effective August 1, 2013 the excise tax on motor fuels was increased to $0.24 from $0.21 per gallon
• This legislation also provided that the excise tax is to be adjusted for increases in the consumer price

index beginning January 1, 2015

• On September 4, 2013 the Attorney General certified an initiative petition that would repeal the

indexing provision – the Commonwealth is not using the indexing for revenue projections and future issuance

• According to the Commonwealth’s Department of Revenue tax revenue report for September 2013,

“the 3 cents increase in gasoline/special fuels tax rate is expected to increase motor fuel tax collections by $8.6 million in September”

Total Annual CTF Pledged Funds: $1.280 Billion

Chapter 64A Gas Tax: $655.7 Million (51.2%) BABs Subsidies: $ 11.4 Million (0.9%) RMV Fees: $522.2 Million (40.8%) Chapter 64E Special Fuels Tax and Chapter 64F Motor Carrier Tax: $90.9 Million (7.1%)

Accelerated Bridge Program Financings, 2013 Series A

24 Commonwealth Transportation Fund

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CTF Bond Flow of Funds and Timing of Payments

 On a monthly basis, CTF Pledged Funds will be set aside to cover 1/5 of semi-annual interest and 1/10th of annual principal for CTF Bonds

Accelerated Bridge Program Financings, 2013 Series A

CTF Bond Flow of Funds

Monthly Deposits CTF Pledged Funds Debt Service Fund Bond Related Costs Fund Rebate Fund

Commonwealth-Held Fund

Monthly Transfers for Debt Service Payments:

• 1/5th Interest
• 1/10th Principal

Detailed Timing of Debt Service Fund Transfers and Payments

August September FY Start FY End December 15: Interest Payment June 15: Principal and Interest Payment Monthly Revenue Deposits to CTF July October November December January February March April May June Monthly Transfers to Debt Service Fund:

• 1/5th December 15th Interest Payment
• 1/10th June 15th Principal Payment

Net CTF Pledged Funds Free from Trust Agreement Monthly Transfers to Debt Service Fund:

• 1/5th December 15th Interest Payment
• 1/10th June 15th Principal Payment

Net CTF Pledged Funds Free from Trust Agreement

 CTF Pledged Funds cannot be deposited without appropriation, but CTF Pledged Funds are frozen until debt

service appropriation is made

25 Commonwealth Transportation Fund

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Historic Stability of CTF Pledged Funds

 Diversity of CTF Pledged Funds mitigates the effect of potential declines in gasoline consumption  The following table presents actual Commonwealth Transportation Fund revenues on a ten-year comparative basis, concluding with the prior fiscal year  The table demonstrates the strength, consistency, and reliability of CTF revenues totaling over $1 billion annually since 2002  Additionally, including the August 2013 Motor Fuels Tax hike, pledged revenues exceed $1.2 billion on a pro forma basis

Accelerated Bridge Program Financings, 2013 Series A

Historic Pledged Motor Fuels Tax

Fiscal Year Ending June 30 Chapter 64A Receipts(1) Chapter 64E and 64F Receipts Registry Fees(2) Total 2013 $570,477 $79,302 $522,199 $1,171,978 2012 581,148 79,028 508,608 1,168,784 2011 580,031 79,152 496,034 1,155,217 2010 576,676 76,369 485,789 1,138,834 2009 578,691 73,462 403,780 1,055,687 2008 595,380 75,560 396,904 1,067,844 2007 594,892 79,545 388,496 1,062,934 2006 589,591 80,785 375,670 1,046,046 2005 599,736 84,382 413,481 1,097,599 2004 600,255 82,659 386,284 1,069,197 2003 593,691 81,255 397,683 1,072,629 2002 585,519 79,904 338,440 1,003,863 2001 576,974 81,547 322,808 981,328 2000 572,209 79,041 300,040 951,301 1999 561,714 73,549 297,658 932,921 1998 546,213 73,822 312,180 932,216 1997 535,040 66,528 313,215 914,783 1996 532,324 65,259 280,923 878,507

________ SOURCE: Office of the Comptroller of the Commonwealth, unaudited. (1) Equal to 20.9685¢ of the 21¢ Gasoline Tax imposed under Chapter 64A prior to July 31, 2013; prior to the Transportation Reform Act and the establishment of the Commonwealth Transportation Fund effective fiscal year 2010, the Gasoline Tax imposed under Chapter 64A was credited to the Highway Fund (84.85%), the General Fund (15.0%) and to the Inland Fisheries and Game Fund (0.15%). (2) Certain prior years have been adjusted to reflect reclassification of RMV revenues. 26 Commonwealth Transportation Fund

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History of the Commonwealth Gas Tax

 In FY 2013, approximately 48.6% of CTF Pledged Funds were derived from the Gas Tax imposed under Chapter 64A  Gas Tax returns must be filed with the Commonwealth’s Department of Revenue (“DOR”) by the 20th day

• f each month by each distributor

 Distributors are those who: (i) produce, refine, manufacture or compound gasoline; (ii) operate a port

• r pipeline terminal; and (iii) import or export gasoline

 Currently, fewer than 250 distributors in the Commonwealth  Purchasers pay the Gas Tax to a distributor upon purchase of gasoline, resulting in a very high collection rate  Simultaneously with the filing of the return, each distributor is required to pay DOR the Gas Tax on each taxable gallon of gasoline sold by that distributor during the month covered by the filing

Accelerated Bridge Program Financings, 2013 Series A

History of the Commonwealth Gas Tax1

1 Excludes amounts credited to the Underground Storage Tank Fund

Gas Tax Comparison

 Receipts from the 24-cent Gas Tax are credited to two budgeted

funds in the Commonwealth:

— 23.96 cents of which is credited to the CTF

Excise Tax Rate (Cents/Gallon) Other Taxes and Fees Total New York 8.1 41.8 49.9 Connecticut 25.0 24.3 49.3 Northeast Avg. 23.4 11.0 34.4 Rhode Island 32.0 1.0 33.0 Vermont 18.2 14.0 32.3 Maine 30.0 1.5 31.5 National Avg. 21.3 9.7 31.0 Massachusetts 24.0 2.5 26.5 New Hampshire 18.0 1.6 19.6 Effective Date Excise Tax Rate (Cents/Gallon) Legislation 1928 2 Cents

• St. 1928, c. 316, s.1

1931 3 Cents

• St. 1931, c.122, s.4

1953 5Cents

• St. 1952, c.556, s.12

1957 5.5 Cents St.1956, c. 620, s. 12 1965 6.5 Cents

• St. 1965, c.451, c.1

1974 7.5 Cents

• St. 1971, c. 497, s.1

1980 8.5 Cents

• St. 1979, c. 481, s.1

1980 10% of Distributor Selling Price St. 1980, c.577, s.7 1982 10% of Avg. Selling Price

• St. 1982, c. 352, s. 4

1983 Not Less than 11 Cents

• St. 1983, c. 21, s. 1

1990 Not Less than 17 Cents

• St. 1990, c. 121, s. 36

1991 Not Less than 21 Cents

• St. 1990, c. 121, s.37

2000 21 Cents

• St. 2000, c. 159, s. 126

2013 24 Cents

• St. 2013, c.46, s. 43

27 Commonwealth Transportation Fund

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History of Gasoline Consumption in Massachusetts

 The table below shows the relative inelasticity of gas consumption to price increases  Even during periods of peaks in the price of gas, demand has remained relatively stable

Accelerated Bridge Program Financings, 2013 Series A

Historic Gas Consumption

SOURCES: “Average Price of Gasoline”: U.S. Department of Energy, Energy Information Administration; “Non-Farm Employment”: U.S. Bureau of Labor Statistics; “Gasoline Consumed”: Department of Revenue. (1) Based on Historical Gasoline Tax Collections pursuant to Chapter 64A, except Aviation Fuel. See Commonwealth Motor Fuels Tax – Refunds and Abatements from Gasoline Tax. (2) Seasonally adjusted. Calculated as fiscal year average of monthly employment.

Fiscal Year Average Price

• f Gasoline

Gasoline Consumed (millions of gallons)(1) Percentage Change in Gasoline Consumed Non-Farm Employment (thousands)(2) Percentage Change in Non- Farm Employment 2013 $3.684 2,721 (1.84%) 3,300 1.38% 2012 3.652 2,772 0.19 3,255 1.53 2011 3.204 2,766 0.58 3,203 0.94 2010 2.694 2,750 (0.31) 3,174 (2.01) 2009 2.577 2,759 (2.84) 3,238 (1.71) 2008 3.147 2,839 0.08 3,295 0.90 2007 2.634 2,837 0.90 3,265 1.13 2006 2.583 2,812 (1.69) 3,229 0.83 2005 2.027 2,860 (0.09) 3,202 0.39 2004 1.742 2,863 1.11 3,189 (1.16)

28 Commonwealth Transportation Fund

SLIDE 35

35

RMV Fees Represent Over 40% of CTF Pledged Funds

 Section 33 of Chapter 90 of the Massachusetts General Laws, as amended, authorizes the Registrar of Motor Vehicles to collect various fees (i.e., RMV Fees)

Accelerated Bridge Program Financings, 2013 Series A

1) License — Driver’s license — Identification cards — Professional driving schools — Reinstatement fees 2) Registration — Motor vehicle registration fees

according to types of license plates

3) Registry Information — Title fees — Inspection fees — Court records fees — Citation-related fees

RMV Fee Categories

• Collected at administrative headquarters, 30 branch locations, via a

telephone center and online

• Certain third parties (i.e., Southern New England AAA offices) may

also collect fees on behalf of the RMV and are required to keep such revenues segregated from other sources of revenue

• Methods of payment include cash, checks, electronic checks, money
• rders, credit card and debit card
• Security measures in connection with fee collection are established by

MassDOT

• Internal Audit Department periodically audits branches and

employees for compliance with payment handling policies and procedures

• Administrative sanctions are implemented when appropriate (i.e.,

retraining, termination)

• RMV Fees are swept daily by Massachusetts Treasury, credited to

the appropriate accounts and recorded by the Comptroller of the Commonwealth into the Commonwealth’s accounting system RMV Fee Collection Mechanics

29 Commonwealth Transportation Fund

SLIDE 36

36

RMV Fees are a steady revenue for the CTF

 RMV Fees are unaffected by gasoline demand, providing a strong measure of diversification of CTF Pledged Funds for bondholders  In 2009, the RMV Fee schedule was simplified and consolidated with adjustments to certain fees  Prior to that change, the fee structure had been constant since 2003

Accelerated Bridge Program Financings, 2013 Series A

1993-2002 2003-2009 2009-2014 Passenger Vehicle Registration Renewal

• 1993-1995: $30
• 1995-2000: No renewal

fee under lifetime registration

• 2000-2002: $30
• $36
• $50

Commercial Vehicle Registration Renewal1

• $15 per 1,000 lbs of

gross vehicle weight (“GVW”) for a 1-year registration

• $15 per 1,000 lbs of

GVW for a 1-year registration

• $40 per 1,000 lbs of

GVW for a 2-year registration New Certificate

• f Title
• $50
• $50
• $75

Class D License Renewal

• $33.75
• $40
• $50

New Passenger Vehicle Registration

• $30
• $36
• $50

New Commercial Vehicle Registration1

• $15 per 1,000 lbs of

GVW for a 1-year registration

• $15 per 1,000 lbs of

GVW for a 1-year registration

• $40 per 1,000 lbs of

GVW for a 2-year registration

Source: RMV

1 For vehicles up to 5,000 lbs

Rate Detail for Key Revenue Sources RMV Fee Collections

Source: MassDOT, DOR

Increase in Revenues due to Change in Fee Structure

Fiscal Year Pledged Registry Fee Receipts

(in thousands)(1)

Percentage Change in Registry Fee Receipts 2013 $522,199 2.67% 2012 508,608 2.53% 2011 496,034 2.11% 2010 485,789 20.31% 2009 403,780 1.73% 2008 396,904 2.16% 2007 388,496 3.41% 2006 375,670 (9.14%) 2005 413,481 7.04% 2004 386,284 (2.87%)

30 Commonwealth Transportation Fund

SLIDE 37

37

Key Credit Strengths: Commonwealth Transportation Fund

Key CTF Credit Points Diverse and Stable Revenue Stream  Pledged revenues include fuel and non-fuel sources with Gas Tax and RMV Fees  Statewide taxes and fees, on large and diverse regional economy  Revenue collections are strong and diverse in timing  Trust Agreement does not allow the Commonwealth to change the rate of the Registry Fees or the Motor Fuels Tax unless Net Pledged Revenues exceed 4.0x MADS coverage  No Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay principal and interest Appropriation  Payment of CTF Bonds from CTF Pledged Funds requires legislative appropriation annually  However, if no appropriation is made for debt service, all funds in the CTF are frozen and may not be utilized, so there is an overwhelming incentive to appropriate that fully mitigates this risk Debt Service Coverage After 2013 Series A Issue*  Massive state FY2014 MADS coverage of 17.5x based on budgeted 2014 CTF revenues of $1,210.503 million, and strong projected coverage of 12.7x through 17.5x through state FY2043 Additional Bonds Test  Pledged Funds for any 12 consecutive months during the last 18 months must be at least 4.0x future MADs, including the Additional Bonds The Commonwealth’s Rate Covenants  Trust Agreement does not allow the Commonwealth to change the rate of the Registry Fees or the Motor Fuels Tax unless Net Pledged Revenues exceed 4.0x MADS coverage after the changes  NO Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay principal and interest  Article 78 – State Constitution requires all revenue from vehicle, fuel and license fees be used for highway purposes only Debt Service Fund  Advanced monthly funding of principal and interest on a 1/10th and 1/5th basis

Accelerated Bridge Program Financings, 2013 Series A

*Preliminary, subject to change 31 Commonwealth Transportation Fund

SLIDE 38

38

CTF Credit Compared to other ‘AAA’ HRB Programs

Select Examples of ‘AAA’ State Highway Revenue Bond Programs

State Revenue Pledge Ratings (M/S/F) DSRF Requirement ABT Debt Service Coverage AZ Basket Aa1/AAA/NR Optional 4.00x 5.24x-6.78x KS Basket Aa1/AAA/AA+ Lesser of 3 Tests 3.00x 4.08x-5.78x(1) MA Basket Aaa/AAA/NR None 4.00x 12.65x-17.48x(2) MO Basket Aaa/AAA/AAA None 4.00x 8.80x-34.49x NM Basket Aa1/AAA/NR None 3.00x 6.03x-35.39x OR Basket Aa1/AAA/AA+ None 3.00x 4.10x-5.20x TX Basket Aaa/AAA/NR None 4.00x 16.65x-20.36x(1)

Source: Recent Official Statements and Annual Financial Reports as of September 2013 (1) Coverage levels represent DS Coverage before BABs subsidy (2) Represents expected DS Coverage levels inclusive of expected 2013 CTF Bond sale

 CTF contains all of the essential components of a successful highway revenue bond program including:

• Diverse and economically-resilient basket of revenues in excess of $1.2 Billion annually, which has been

bolstered by an increase in the gas tax to $0.24 from $0.21 per gallon

• A strong covenant package with a 4.0x ABT and a 4.0x rates and fees covenant
• Debt Service coverage on the CTF Bonds exceeds that of other ‘AAA’ Highway Revenue Bond Programs
• Backed by two consolidated security sources 1) motor fuel and 2) registry fees are really six sources of

security for bondholders

Accelerated Bridge Program Financings, 2013 Series A

32 Commonwealth Transportation Fund

SLIDE 39

39

16.7 12.7 8.8 6.0 5.2 4.1 4.1 0x 2x 4x 6x 8x 10x 12x 14x 16x 18x TX MA MO NM AZ OR KS

Debt Service Coverage

CTF Projected Coverage vs. Other ‘AAA’ HRB Programs

Accelerated Bridge Program Financings, 2013 Series A

‘AAA’ State Highway Revenue Bond Programs Minimum Debt Service Coverage Ratios

Source: Recent Official Statements and Annual Financial Reports as of September 2013 33 Commonwealth Transportation Fund

SLIDE 40

40

CTF Flow of Funds

 Excise tax imposed on fuel, excluding Aviation Fuel, by the provisions of Chapter 64A, 64E and 64F of the General Laws (i.e., the Motor Fuels Tax): Chapter 64A: Gas Tax levied on each gallon of gasoline sold or used in the Commonwealth

• 99.85% of the 24-cent tax is included as CTF Pledged Funds
• 6.86 cents is pledged on a senior basis to Existing Gas Tax

Bonds, but CTF Pledged Funds include revenues after payment

• f Existing Gas Tax Bonds

Chapter 64E: Special Fuels Tax levied on each of specials fuels (24 cents) and liquefied gas sold or used in the Commonwealth

• 100% of the 24-cent tax is included as CTF Pledged Funds

Chapter 64F: Motor Carrier Tax levied on each gallon of gasoline and special fuels acquired outside and used within the Commonwealth

• 100% of the 24-cent tax is included as CTF Pledged Funds

 RMV Fees received by the Registrar of Motor Vehicles pursuant to Section 33 of Chapter 90 of the General Laws  Direct Payments received from U.S. Treasury related to BABs  Additional Pledged Funds that the Commonwealth may subsequently determine to include as CTF Pledged Funds

CTF Pledged Funds

CTF Flow of Funds

ABP New Money CTF Bonds

6.86 Cents of the Gas Tax

Existing Gas Tax Bonds

2010 Trust Agreement 1994 Trust Agreement Excess of 6.86 Cents of Gas Tax (Approximately $131 Million Annually)



Motor Fuels Tax



RMV Fees

Accelerated Bridge Program Financings, 2013 Series A

34 Commonwealth Transportation Fund

SLIDE 41

• 4b. Grant Anticipation Notes

Whittier Bridge

SLIDE 42

42

Credit Strength of FHWA Funding for the GANs

Accelerated Bridge Program Financings, 2013 Series A

• Even during the recent Federal Government shutdown, FHWA reimbursements flowed weekly to

Massachusetts without interruption due to the strong base of national dedicated taxes flowing directly into the Highway Trust Fund

• Due to the fact that Highway Trust Fund revenues are being generated through four taxes or fees and

strong statutory features, the HTF has mandatory budget authority in the form of federal contract authority

• FHWA programs and employees are paid out of contract authority accounts

 FHWA employees continued to report to work throughout the federal shutdown

• MAP-21 provides full FY2014 FHWA contract authority permitting obligation authority to flow to the

states in the lapse of appropriations acts

• Therefore, Highway Trust fund revenues are not impacted by Sequestration Acts, permitting roughly

$38 to 39 billion to flow to states in obligation authority

• Sequestration Acts do impact the General Fund “patch” of $12.6 billion

35 Grant Anticipation Notes

SLIDE 43

43

Key Credit Strengths: Double-Barreled ABP Security for GANs

Key GAN Credit Points Diverse and Stable Revenue Stream  Generally positive trends in federal obligation authority, closure and imminent full pay off of Senior GANs  If Federal Highway reimbursements are not sufficient to pay debt service on GANs, Net CTF Pledged Funds to be appropriated, as per the Trust Agreement  Use of Federal Highway reimbursements to pay the ABP GANs does not require a State appropriation Strong CTF Pledged Funds Appropriation Process  Secondary pledge of net CTF revenues, while subject to appropriation, is collected and frozen in a holding account until an appropriation is made and/or federal highway reimbursements are sufficient to meet any

• utstanding obligations, so there is an overwhelming incentive to timely appropriate all DS funds

 No Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay principal and interest Double-Barreled Revenue Stream  GANs are double-barreled secured by both Federal Reimbursements after the senior GANs are paid and also by more than $1 Billion in CTF Net Pledged Revenues, resulting in massive debt service coverage; Senior GANs mature in June 2015 and all but one payment has already been pre-funded so ABP GANs effectively are Senior Debt Service Coverage After 2013 Series A Issue*  Massive SFY2014 MADS coverage of 128.0x based on budgeted 2014 net federal reimbursements of $445.330 million, and strong projected coverage of 37.3x – 128.0x (incorporates excess CTF revenues) through state FY2027, even without estimating additional revenues expected from motor fuels tax indexing enacted in 2013 Two Independent Additional Bonds Test Requirements Two Pronged Test From a Dual Revenue Pledge – Two Independent Sources Provide Combined 4X ABT

1) Amount of reimbursements during any 12 consecutive months out of an 18 month period (with the last full month

proceeding the date of issuance of the Additional Notes) must not be less than 1.5x MADS in the current or any future state FY; AND

2) Amount of Net CTF funds received during same 12 consecutive months must not be less than 2.5x MADS in the

current or any future state FY CTF Rates Covenant

• n Motor Fuels and

Registry Fees  Trust Agreement does not allow the Commonwealth to change the rate of the Registry Fees or the Motor Fuels Tax unless Net Pledged Revenues exceed 4.0x MADS coverage after the changes  NO Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay principal and interest  Article 78 – State Constitution requires all revenue from vehicle, fuel and license fees be used for highway purposes only

Accelerated Bridge Program Financings, 2013 Series A

*Preliminary, subject to change 36 Grant Anticipation Notes

SLIDE 44

44

ABP Program Flow of Funds and Double Barrel GAN Security

Federal Highway Reimbursements

Credit Structure for ABP Financing Program

Existing GANs ABP New Money GANs

1998 Trust Agreement 2010 Trust Agreement

CTF Pledged Funds Existing Gas Tax Bonds ABP New Money CTF Bonds

1994 Trust Agreement 2010 Trust Agreement

Excess Net CTF Pledged Funds of More Than $1 Billion Per Year Provide Independent Second Barrel

• f Aaa Quality Security for

ABP GANS

6.86 Cents of Gas Tax Only Excess

Accelerated Bridge Program Financings, 2013 Series A

37 Grant Anticipation Notes

SLIDE 45

• 5. Pro Forma Debt Service Coverage

River Street Bridge

SLIDE 46

46

Projected CTF Coverage Including Proposed 2013 Offering*

 Total projected debt service coverage on the CTF Bonds, including the 2013 offering, ranges from 12.6x to 17.4x through state FY2043

Accelerated Bridge Program Financings, 2013 Series A

*Preliminary, subject to change

SFY Ending June 30 2014 1,262,730,791 52,227,574 1,210,503,217 32,623,280 26,248,650 58,871,930 20.56x 10,384,689 69,256,619 17.48x 1,141,246,598 2015 1,280,274,998 52,224,674 1,228,050,324 32,623,280 26,049,900 58,673,180 20.93x 18,148,000 76,821,180 15.99x 1,151,229,144 2016 1,280,274,998 50,905,824 1,229,369,174 32,623,280 26,174,900 58,798,180 20.91x 18,148,000 76,946,180 15.98x 1,152,422,994 2017 1,280,274,998 51,276,324 1,228,998,674 32,623,280 26,291,900 58,915,180 20.86x 18,148,000 77,063,180 15.95x 1,151,935,494 2018 1,280,274,998 29,825,319 1,250,449,679 32,623,280 26,594,900 59,218,180 21.12x 18,148,000 77,366,180 16.16x 1,173,083,499 2019 1,280,274,998 29,818,119 1,250,456,879 32,623,280 26,888,150 59,511,430 21.01x 18,148,000 77,659,430 16.10x 1,172,797,449 2020 1,280,274,998 29,821,619 1,250,453,379 32,623,280 27,385,150 60,008,430 20.84x 18,148,000 78,156,430 16.00x 1,172,296,949 2021 1,280,274,998 29,820,772 1,250,454,226 32,623,280 27,888,650 60,511,930 20.66x 18,148,000 78,659,930 15.90x 1,171,794,296 2022 1,280,274,998 29,820,997 1,250,454,001 32,623,280 28,025,650 60,648,930 20.62x 18,148,000 78,796,930 15.87x 1,171,657,071 2023 1,280,274,998

• 1,280,274,998

32,623,280 28,906,650 61,529,930 20.81x 26,728,000 88,257,930 14.51x 1,192,017,068 2024 1,280,274,998

• 1,280,274,998

53,948,280 24,697,400 78,645,680 16.28x 17,719,000 96,364,680 13.29x 1,183,910,318 2025 1,279,925,009

• 1,279,925,009

53,940,727 24,323,400 78,264,127 16.35x 17,719,000 95,983,127 13.33x 1,183,941,881 2026 1,279,546,548

• 1,279,546,548

53,930,516 23,926,400 77,856,916 16.43x 17,719,000 95,575,916 13.39x 1,183,970,632 2027 1,279,115,830

• 1,279,115,830

53,914,415 23,613,800 77,528,215 16.50x 17,719,000 95,247,215 13.43x 1,183,868,615 2028 1,278,661,154

• 1,278,661,154

53,899,548 23,205,575 77,105,123 16.58x 23,229,000 100,334,123 12.74x 1,178,327,030 2029 1,278,181,146

• 1,278,181,146

53,886,693 22,836,575 76,723,268 16.66x 23,613,500 100,336,768 12.74x 1,177,844,379 2030 1,277,674,344

• 1,277,674,344

53,866,342 22,583,325 76,449,667 16.71x 23,885,000 100,334,667 12.73x 1,177,339,677 2031 1,277,139,377

• 1,277,139,377

53,849,275 22,165,925 76,015,200 16.80x 24,317,500 100,332,700 12.73x 1,176,806,677 2032 1,276,564,568

• 1,276,564,568

53,834,542 21,702,925 75,537,467 16.90x 24,796,500 100,333,967 12.72x 1,176,230,601 2033 1,275,957,090

• 1,275,957,090

53,814,230 21,140,050 74,954,280 17.02x 25,382,750 100,337,030 12.72x 1,175,620,060 2034 1,275,315,177

• 1,275,315,177

53,792,895 20,610,050 74,402,945 17.14x 25,933,750 100,336,695 12.71x 1,174,978,482 2035 1,274,636,872

• 1,274,636,872

53,769,519 20,043,450 73,812,969 17.27x 26,523,750 100,336,719 12.70x 1,174,300,154 2036 1,273,920,129

• 1,273,920,129

53,742,797 19,441,650 73,184,447 17.41x 27,153,250 100,337,697 12.70x 1,173,582,432 2037 1,273,162,807

• 1,273,162,807

53,721,140 18,646,050 72,367,190 17.59x 27,967,500 100,334,690 12.69x 1,172,828,117 2038 1,272,297,654

• 1,272,297,654

53,692,096 17,779,550 71,471,646 17.80x 28,864,250 100,335,896 12.68x 1,171,961,758 2039 1,271,210,394

• 1,271,210,394

53,663,503 16,670,800 70,334,303 18.07x 30,000,750 100,335,053 12.67x 1,170,875,341 2040 1,270,061,507

• 1,270,061,507

53,637,336 15,489,363 69,126,699 18.37x 31,206,000 100,332,699 12.66x 1,169,728,808 2041 1,268,847,403

• 1,268,847,403
• 67,828,800

67,828,800 18.71x 32,506,750 100,335,550 12.65x 1,168,511,853 2042 1,268,847,403

• 1,268,847,403
• 100,333,000

100,333,000 12.65x 1,168,514,403 2043 1,268,847,403

• 1,268,847,403
• 100,332,750

100,332,750 12.65x 1,168,514,653 2044 1,268,847,403

• 1,268,847,403
• 1,268,847,403

2045 1,268,847,403

• 1,268,847,403
• 1,268,847,403

2046 1,268,847,403

• 1,268,847,403
• 1,268,847,403

Total Program Projected Debt Service Excess Pledged Revenues Total Projected Program Debt Service Coverage1 1 - Estimated debt service coverage based on FY2013 unaudited amounts and assumes 0% growth but does reflect the incremental impact of the July 31, 2013 increase in Motor Fuels Tax rates to 24 cents per gallon from 21 cents per gallon. 2010 Bonds Total Debt Service 2012 Bonds Total Debt Service Total Outstanding Debt Service3 Current Total Program Debt Service Coverage1 3 - Outstanding Debt Service represents gross debt service on the 2010 and 2012 Bonds. 1994 Trust Agreement Bonds Total Debt Service Net Projected CTF Pledged Revenues and BABs Payments Total Projected Pledged Revenues2 2013 Bonds Projected Total Debt Service 2 - Consists of (i) 23.964 cents of Chapter 64A Gasoline Tax (ii) 100% of the Special Fuels and Motor Carrier Tax (iii) Registry Fees expected to be credited to the Commonwealth Transportation Fund pursuant to Section 34(iii) and (iv) interest subsidy payments relating to 2010 Bonds. Assumes 0% growth. FY14 Pledged Revenues reflects partial year of increased gas tax.

38 Pro Forma Debt Service Coverage

SLIDE 47

47

Projected CTF Coverage Through Full ABP Program*

 The following shows debt service coverage on all anticipated CTF Bonds, assuming the issuance of approximately $796.29 million of Senior CTF obligations in aggregate through 2015, is estimated to be greater than 10.0x in every year through state FY2045 for the entire CTF ABP Program  We also note that we do not incorporate recent legislative changes and future growth resulting from any inflation indexing of the gas tax in our analysis

Accelerated Bridge Program Financings, 2013 Series A

*Preliminary, subject to change

SFY Ending June 30 2014 1,262,730,791 52,227,574 1,210,503,217 32,623,280 26,248,650 58,871,930 20.56x 10,384,689 69,256,619 17.48x

• 69,256,619

17.48x 1,141,246,598 2015 1,280,274,998 52,224,674 1,228,050,324 32,623,280 26,049,900 58,673,180 20.93x 18,148,000 76,821,180 15.99x

• 76,821,180

15.99x 1,151,229,144 2016 1,280,274,998 50,905,824 1,229,369,174 32,623,280 26,174,900 58,798,180 20.91x 18,148,000 76,946,180 15.98x 13,675,500 90,621,680 13.57x 1,138,747,494 2017 1,280,274,998 51,276,324 1,228,998,674 32,623,280 26,291,900 58,915,180 20.86x 18,148,000 77,063,180 15.95x 13,675,500 7,991,000 98,729,680 12.45x 1,130,268,994 2018 1,280,274,998 29,825,319 1,250,449,679 32,623,280 26,594,900 59,218,180 21.12x 18,148,000 77,366,180 16.16x 13,675,500 7,991,000 99,032,680 12.63x 1,151,416,999 2019 1,280,274,998 29,818,119 1,250,456,879 32,623,280 26,888,150 59,511,430 21.01x 18,148,000 77,659,430 16.10x 13,675,500 7,991,000 99,325,930 12.59x 1,151,130,949 2020 1,280,274,998 29,821,619 1,250,453,379 32,623,280 27,385,150 60,008,430 20.84x 18,148,000 78,156,430 16.00x 13,675,500 7,991,000 99,822,930 12.53x 1,150,630,449 2021 1,280,274,998 29,820,772 1,250,454,226 32,623,280 27,888,650 60,511,930 20.66x 18,148,000 78,659,930 15.90x 13,675,500 7,991,000 100,326,430 12.46x 1,150,127,796 2022 1,280,274,998 29,820,997 1,250,454,001 32,623,280 28,025,650 60,648,930 20.62x 18,148,000 78,796,930 15.87x 13,675,500 7,991,000 100,463,430 12.45x 1,149,990,571 2023 1,280,274,998

• 1,280,274,998

32,623,280 28,906,650 61,529,930 20.81x 26,728,000 88,257,930 14.51x 13,675,500 7,991,000 109,924,430 11.65x 1,170,350,568 2024 1,280,274,998

• 1,280,274,998

53,948,280 24,697,400 78,645,680 16.28x 17,719,000 96,364,680 13.29x 13,675,500 7,991,000 118,031,180 10.85x 1,162,243,818 2025 1,279,925,009

• 1,279,925,009

53,940,727 24,323,400 78,264,127 16.35x 17,719,000 95,983,127 13.33x 13,675,500 7,991,000 117,649,627 10.88x 1,162,275,381 2026 1,279,546,548

• 1,279,546,548

53,930,516 23,926,400 77,856,916 16.43x 17,719,000 95,575,916 13.39x 13,675,500 7,991,000 117,242,416 10.91x 1,162,304,132 2027 1,279,115,830

• 1,279,115,830

53,914,415 23,613,800 77,528,215 16.50x 17,719,000 95,247,215 13.43x 13,675,500 7,991,000 116,913,715 10.94x 1,162,202,115 2028 1,278,661,154

• 1,278,661,154

53,899,548 23,205,575 77,105,123 16.58x 23,229,000 100,334,123 12.74x 16,570,500 9,281,000 126,185,623 10.13x 1,152,475,530 2029 1,278,181,146

• 1,278,181,146

53,886,693 22,836,575 76,723,268 16.66x 23,613,500 100,336,768 12.74x 16,570,750 9,276,500 126,184,018 10.13x 1,151,997,129 2030 1,277,674,344

• 1,277,674,344

53,866,342 22,583,325 76,449,667 16.71x 23,885,000 100,334,667 12.73x 16,573,750 9,274,000 126,182,417 10.13x 1,151,491,927 2031 1,277,139,377

• 1,277,139,377

53,849,275 22,165,925 76,015,200 16.80x 24,317,500 100,332,700 12.73x 16,574,000 9,278,250 126,184,950 10.12x 1,150,954,427 2032 1,276,564,568

• 1,276,564,568

53,834,542 21,702,925 75,537,467 16.90x 24,796,500 100,333,967 12.72x 16,571,250 9,278,750 126,183,967 10.12x 1,150,380,601 2033 1,275,957,090

• 1,275,957,090

53,814,230 21,140,050 74,954,280 17.02x 25,382,750 100,337,030 12.72x 16,570,250 9,275,500 126,182,780 10.11x 1,149,774,310 2034 1,275,315,177

• 1,275,315,177

53,792,895 20,610,050 74,402,945 17.14x 25,933,750 100,336,695 12.71x 16,570,500 9,278,500 126,185,695 10.11x 1,149,129,482 2035 1,274,636,872

• 1,274,636,872

53,769,519 20,043,450 73,812,969 17.27x 26,523,750 100,336,719 12.70x 16,571,500 9,277,250 126,185,469 10.10x 1,148,451,404 2036 1,273,920,129

• 1,273,920,129

53,742,797 19,441,650 73,184,447 17.41x 27,153,250 100,337,697 12.70x 16,567,750 9,276,750 126,182,197 10.10x 1,147,737,932 2037 1,273,162,807

• 1,273,162,807

53,721,140 18,646,050 72,367,190 17.59x 27,967,500 100,334,690 12.69x 16,574,000 9,271,750 126,180,440 10.09x 1,146,982,367 2038 1,272,297,654

• 1,272,297,654

53,692,096 17,779,550 71,471,646 17.80x 28,864,250 100,335,896 12.68x 16,569,250 9,277,250 126,182,396 10.08x 1,146,115,258 2039 1,271,210,394

• 1,271,210,394

53,663,503 16,670,800 70,334,303 18.07x 30,000,750 100,335,053 12.67x 16,573,500 9,272,500 126,181,053 10.07x 1,145,029,341 2040 1,270,061,507

• 1,270,061,507

53,637,336 15,489,363 69,126,699 18.37x 31,206,000 100,332,699 12.66x 16,570,750 9,277,750 126,181,199 10.07x 1,143,880,308 2041 1,268,847,403

• 1,268,847,403
• 67,828,800

67,828,800 18.71x 32,506,750 100,335,550 12.65x 16,570,750 9,277,250 126,183,550 10.06x 1,142,663,853 2042 1,268,847,403

• 1,268,847,403
• 100,333,000

100,333,000 12.65x 16,572,750 9,276,000 126,181,750 10.06x 1,142,665,653 2043 1,268,847,403

• 1,268,847,403
• 100,332,750

100,332,750 12.65x 16,571,000 9,278,750 126,182,500 10.06x 1,142,664,903 2044 1,268,847,403

• 1,268,847,403
• 110,250,000

15,935,000 126,185,000 10.06x 1,142,662,403 2045 1,268,847,403

• 1,268,847,403
• 110,250,000

15,931,750 126,181,750 10.06x 1,142,665,653 2046 1,268,847,403

• 1,268,847,403
• 115,500,000

115,500,000 10.99x 1,153,347,403 Excess Pledged Revenues 2015 Bonds Projected Total Debt Service Total Program Projected Debt Service Total Projected Program Debt Service Coverage1 3 - Outstanding Debt Service represents gross debt service on the 2010 and 2012 Bonds. 1 - Estimated debt service coverage based on FY2013 unaudited amounts and assumes 0% growth but does reflect the incremental impact of the July 31, 2013 increase in Motor Fuels Tax rates to 24 cents per gallon from 21 cents per gallon. 2 - Consists of (i) 23.964 cents of Chapter 64A Gasoline Tax (ii) 100% of the Special Fuels and Motor Carrier Tax (iii) Registry Fees expected to be credited to the Commonwealth Transportation Fund pursuant to Section 34(iii) and (iv) interest subsidy payments relating to 2010 Bonds. Assumes 0% growth. FY14 Pledged Revenues reflects partial year of increased gas tax. 2012 Bonds Total Debt Service Total Program Projected Debt Service Total Projected Program Debt Service Coverage1 Total Outstanding Debt Service3 Current Total Program Debt Service Coverage1 Net Projected CTF Pledged Revenues and BABs Payments 1994 Trust Agreement Bonds Total Debt Service Total Projected Pledged Revenues2 2013 Bonds Projected Total Debt Service 2014 Bonds Projected Total Debt Service 2010 Bonds Total Debt Service

39 Pro Forma Debt Service Coverage

SLIDE 48

48

Projected GAN Coverage Including Proposed 2013 Offering*

 Net Federal Highway Reimbursements represent Federal Highway Reimbursements available to pay debt service on the Notes, following payment of Senior Federal Highway Notes which fully mature in state

• FY2015. Net CTF Pledged Funds assume the issuance of $362.96 million CTF obligations in 2013

 Total projected debt service coverage on the Notes, including the 2013 offering, ranges from 37.3x to 128.04x through state FY2027

Accelerated Bridge Program Financings, 2013 Series A

*Preliminary, subject to change SFY Ending June 30 Net CTF Pledged Revenues2 2013 Series A Debt Service Total Pro Forma Debt Service Net Federal Highway Reimbursements Only Net CTF Pledged Funds Only Total Pro Forma Debt Service Coverage4 2014 445,330,259 1,141,246,598 1,586,576,856 4,268,265 8,122,692 12,390,957 35.94x 92.10x 128.04x 2015 445,328,184 1,151,229,144 1,596,557,327 4,268,265 13,793,250 18,061,515 24.66x 63.74x 88.40x 2016 629,167,506 1,152,422,994 1,781,590,500 15,488,383 32,273,250 47,761,633 13.17x 24.13x 37.30x 2017 629,044,570 1,151,935,494 1,780,980,064 15,354,886 32,274,250 47,629,136 13.21x 24.19x 37.39x 2018 628,900,586 1,173,083,499 1,801,984,085 15,201,587 32,271,500 47,473,087 13.25x 24.71x 37.96x 2019 628,739,150 1,172,797,449 1,801,536,599 15,024,553 32,273,250 47,297,803 13.29x 24.80x 38.09x 2020 628,562,165 1,172,296,949 1,800,859,114 14,834,649 32,272,250 47,106,899 13.34x 24.89x 38.23x 2021 628,371,596 1,171,794,296 1,800,165,891 14,632,921 32,276,250 46,909,171 13.40x 24.98x 38.38x 2022 628,167,661 1,171,657,071 1,799,824,732 14,410,044 32,272,500 46,682,544 13.46x 25.10x 38.55x 2023 627,949,437 1,192,017,068 1,819,966,505 14,178,170 32,273,750 46,451,920 13.52x 25.66x 39.18x 2024 627,836,351 1,183,910,318 1,811,746,669

• 32,272,000

32,272,000 19.45x 36.69x 56.14x 2025 627,836,351 1,183,941,881 1,811,778,232

• 32,274,500

32,274,500 19.45x 36.68x 56.14x 2026 627,836,351 1,183,970,632 1,811,806,983

• 32,275,500

32,275,500 19.45x 36.68x 56.14x 2027 627,836,351 1,183,868,615 1,811,704,966

• 32,271,750

32,271,750 19.45x 36.68x 56.14x 2028 627,836,351 1,178,327,030 1,806,163,381

• 2029

627,836,351 1,177,844,379 1,805,680,730

• 2030

627,836,351 1,177,339,677 1,805,176,028

• 4 - Total Pro Forma Coverage includes Net Federal Highway Reimbursements and Net CTF Pledged Funds.

Estimated Debt Service Coverage 3 - Outstanding Debt Service represents gross debt service on the Notes. Net Federal Highway Reimbursements and BABs Payments1 2 - Net CTF Pledged Funds based on the Commonwealth’s actual receipts in SFY2013 of Motor Fuels Tax, adjusted to include the 3¢ per gallon increase to the Motor Fuels Tax effective July 31, 2013, assuming no growth in such receipts and no adjustments for increases in the consumer price index in future years, net of amounts to be used for debt service payments on the 1994 Trust Agreement Bonds and the Senior CTF Bonds, including projected debt service for the 2013 CTF Bonds. 1 - FY2013 Federal Highway Reimbursements assumed to equal projected gross receipts for FFY14 in the amount of $627,836,351. Net Federal Highway Reimbursements are net of debt service payments on Senior Federal Highway Notes and includes Federal BABs payments for 2010 Series A Notes. Total Projected Pledged Revenues Debt Service

• n 2010 Series

A Notes3 40 Pro Forma Debt Service Coverage

SLIDE 49

49

Projected GAN Coverage Through Full ABP Program*

 The following table sets forth estimated debt service coverage on the 2013 Notes as well as the annual debt service for the anticipated Notes to be issued under the Accelerated Bridge Program in 2014 and 2015 ($226.605 million and $307.12 million, respectively).  Total projected debt service coverage on all anticipated Notes, assuming the issuance of approximately $796.29 million of Senior CTF obligations and approximately $821.590 million Notes to finance the Accelerated Bridge program ranges from 16.2x to 128.0x through state FY2027

Accelerated Bridge Program Financings, 2013 Series A

*Preliminary, subject to change

SFY Ending June 30 Net CTF Pledged Revenues2 Debt Service

• n 2010 Series

A Notes3 2013 Series A Debt Service 2014 Series A Debt Service 2015 Series A Debt Service Total Pro Forma Debt Service Net Federal Highway Reimbursements Only Net CTF Pledged Funds Only Total Pro Forma Debt Service Coverage4 2014 445,330,259 1,141,246,598 1,586,576,856 4,268,265 8,122,692

• 12,390,957

35.94x 92.10x 128.04x 2015 445,328,184 1,151,229,144 1,596,557,327 4,268,265 13,793,250 6,924,042

• 24,985,557

17.82x 46.08x 63.90x 2016 629,167,506 1,138,747,494 1,767,915,000 15,488,383 32,273,250 25,565,250 23,059,222 96,386,106 6.53x 11.81x 18.34x 2017 629,044,570 1,130,268,994 1,759,313,564 15,354,886 32,274,250 25,568,500 35,327,250 108,524,886 5.80x 10.41x 16.21x 2018 628,900,586 1,151,416,999 1,780,317,585 15,201,587 32,271,500 25,566,000 35,329,500 108,368,587 5.80x 10.63x 16.43x 2019 628,739,150 1,151,130,949 1,779,870,099 15,024,553 32,273,250 25,566,250 35,330,000 108,194,053 5.81x 10.64x 16.45x 2020 628,562,165 1,150,630,449 1,779,192,614 14,834,649 32,272,250 25,567,250 35,326,250 108,000,399 5.82x 10.65x 16.47x 2021 628,371,596 1,150,127,796 1,778,499,391 14,632,921 32,276,250 25,567,000 35,325,750 107,801,921 5.83x 10.67x 16.50x 2022 628,167,661 1,149,990,571 1,778,158,232 14,410,044 32,272,500 25,568,500 35,325,500 107,576,544 5.84x 10.69x 16.53x 2023 627,949,437 1,170,350,568 1,798,300,005 14,178,170 32,273,750 25,564,500 35,327,500 107,343,920 5.85x 10.90x 16.75x 2024 627,836,351 1,162,243,818 1,790,080,169

• 32,272,000

25,568,000 35,328,500 93,168,500 6.74x 12.47x 19.21x 2025 627,836,351 1,162,275,381 1,790,111,732

• 32,274,500

25,566,250 35,325,250 93,166,000 6.74x 12.48x 19.21x 2026 627,836,351 1,162,304,132 1,790,140,483

• 32,275,500

25,567,000 35,329,500 93,172,000 6.74x 12.47x 19.21x 2027 627,836,351 1,162,202,115 1,790,038,466

• 32,271,750

25,567,500 35,327,250 93,166,500 6.74x 12.47x 19.21x 2028 627,836,351 1,152,475,530 1,780,311,881

• 2029

627,836,351 1,151,997,129 1,779,833,480

• 2030

627,836,351 1,151,491,927 1,779,328,278

• 4 - Total Pro Forma Coverage includes Net Federal Highway Reimbursements and Net CTF Pledged Funds.

3 - Outstanding Debt Service represents gross debt service on the Notes. 2 - Net CTF Pledged Funds based on the Commonwealth’s actual receipts in SFY2013 of Motor Fuels Tax, adjusted to include the 3¢ per gallon increase to the Motor Fuels Tax effective July 31, 2013, assuming no growth in such receipts and no adjustments for increases in the consumer price index in future years, net of amounts to be used for debt service payments on the 1994 Trust Agreement Bonds and the Senior CTF Bonds, including projected debt service for the 2013, 2014 and 2015 CTF Bonds. 1 - FY2013 Federal Highway Reimbursements assumed to equal projected gross receipts for FFY14 in the amount of $627,836,351. Net Federal Highway Reimbursements are net of debt service payments on Senior Federal Highway Notes and includes Federal BABs payments for 2010 Series A Notes. Net Federal Highway Reimbursements and BABs Payments1 Estimated Debt Service Coverage Total Projected Pledged Revenues

41 Pro Forma Debt Service Coverage

SLIDE 50

50

Aggregate CTF Projected Offerings through Full ABP Program

Accelerated Bridge Program Financings, 2013 Series A

 The Commonwealth plans to issue $362.96 million of Commonwealth Transportation Fund Bonds in 2013 in addition to planned issuances of approximately $273.51 million in 2014 and $159.82 million in 2015*  Projected debt service coverage on the entire CTF portion of the ABP financings is estimated to be greater than 10.0x*

*Preliminary, subject to change 42 Pro Forma Debt Service Coverage

SLIDE 51

51

Aggregate GAN Projected Offerings through Full ABP Program

Accelerated Bridge Program Financings, 2013 Series A

 The Commonwealth plans to issue $287.865 million of Grant Anticipation Notes in 2013 in addition to planned issuances of approximately $226.605 million in 2014 and $307.12 million in 2015*  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)*

*Preliminary, subject to change 43 Pro Forma Debt Service Coverage

SLIDE 52

52

Summary of Proposed CTF and GAN Scenarios*

Accelerated Bridge Program Financings, 2013 Series A

Total Projected Federal Reimbursements and BABs Payments Total Projected Pledged CTF Revenues and BABs Payments *Preliminary, subject to change Summary of GAN and CTF Scenarios1 Existing Series2 2013 2014 2015 Program Total Grant Anticipation Revenue Notes Par 100,000,000 $ 287,865,000 $ 226,605,000 $ 307,120,000 $ 921,590,000 $ OID/Premium

• 42,574,574

35,508,830 46,947,364 125,030,768 Total 100,000,000 330,439,574 262,113,830 354,067,364 1,046,620,768 Proceeds at Closing 99,448,934 329,000,000 260,979,337 352,529,347 1,041,957,618 Principal Maturities - June 15th 2015-2022 2016-2027 2016-2027 2016-2027 2015-2027 Commonwealth Transportation Fund Par 995,385,000 $ 362,960,000 $ 273,510,000 $ 159,820,000 $ 1,791,675,000 $ OID/Premium 44,903,928 24,096,865 16,226,103 9,377,307 94,604,203 Total 1,040,288,928 387,056,865 289,736,103 169,197,307 1,886,279,203 Proceeds at Closing 1,035,858,516 375,000,000 288,367,254 168,398,000 1,867,623,770 Principal Maturities - June 1st 2014-2040 2023, 2028-2043 2028-2045 2028-2046 2014-2046

1 - Preliminary, Subject to Change. 2 - Existing series include the Commonwealth's $100 million 2010 Series A GANs and $576.125 million 2010 Series A CTF and $419.26 million 2012 Series A Offerings.

Pro Forma Offerings 44 Pro Forma Debt Service Coverage

SLIDE 53

53

GANs and CTF Bonds Able to Withstand Severe Stress Tests*

Hypothetical “Stress Test” - 5X Sequester Cut in Federal Highway Reimbursements  For the GANs, assuming a “stress” of 5x the severity of the Sequester cut to the General Fund patch moneys (a 25% portion of overall funding sources for FHTF) supporting the Federal Highway Fund translates into an overall federal highway reimbursement funding cut of 9.0%  Even with that draconian cut, the ABP GANs have more than 5.22x times minimum coverage of MADs from Federal Highway Reimbursements alone, for the life of the program, and more than 15.63x coverage including Net CTF Pledged Revenues  Even if one immediately layered in an additional “severe stress” impact of a 13% drop in CTF gas tax revenues, the Commonwealth would still demonstrate 14.7x coverage on the GANs from both pledged revenue sources and CTF Bond coverage greater than 9.3x times of MADs, assuming full ABP program issuance

Accelerated Bridge Program Financings, 2013 Series A

Hypothetical GANs Polar Extreme “Stress Test”

• No Federal Highway Reimbursements

 Even assuming NO Federal Highway Reimbursements, the ABP GANs would still have more than 10.4x times minimum year coverage of MADs for the life of the program from CTF Net Pledged Revenues The fact is there is no stress within the realm of possibility that could cause a credit issue on either the ABP GANs or the ABP CTF Bonds

5.2 14.7 10.4 9.3 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 5x Sequester Cut (MADS coverage from Federal Reimbursements alone) 5x Sequester Cut and 13% decrease on CTF Gas Revenues No Federal Highway Reimbursements Debt Service Coverage

Huge Coverage Even Under Severe Stresses

GANs CTF *Preliminary, subject to change 45 Pro Forma Debt Service Coverage

SLIDE 54

• 6. Conclusion

Route 28 Over Merrimack River

SLIDE 55

55

2013 ABP Structuring and Credit Highlights Summary*

 Debt service coverage on $1.8 billion of ABP financings is estimated to be greater than 10.0x  ABT of 4.0x  Large, diverse revenue stream with over $1 billion annually for debt service  History of strong CTF Pledged Fund performance  Revenue covenant to restrict ability to alter Gas Tax and RMV Fees  Constitutional provision requires that transportation revenues be spent only on transportation purposes  Strong legislative support  Monthly funding of debt service on a 1/5th and 1/10th basis for interest and principal, respectively  Closure of Existing Gas Tax liens

CTF Credit Highlights

 Closed senior lien with final payment this State fiscal year and federal fiscal year  Two pronged ABT providing 4.0x MADS coverage  History of success in obligating Federal funds  No appropriation of Federal Highway Reimbursements is necessary  Double barreled security provided by Net CTF Pledged Funds  Debt service is funded one year in advance, thus the final June 15, 2015 payment will be escrowed by June 15, 2014  Projected debt service coverage on all 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) GAN Credit Highlights

*Preliminary, subject to change 46 Conclusion

SLIDE 56

56

Summary Details of CTF and GANs Credit

Accelerated Bridge Program Financings, 2013 Series A

Commonwealth Transportation Fund (CTF) Strong debt service coverage Strong Additional Bonds Test Diverse and stable revenue stream Diverse revenue collection: daily (Registry Fees) and monthly (Gas Tax) deposit of pledged revenues with bond trustee The increased gas tax will generate $95 million a year in increased CTF Fund Pledged Revenues Advanced monthly funding of principal and interest on accelerated 1/10th and 1/5th basis State constitutional dedication of CTF revenues to transportation purposes Commonwealth non-impairment covenant and covenant to maintain CTF rates and fees requiring at least 4x MADS coverage Grant Anticipation Notes (GANs) Closed senior lien with final payment this State fiscal year and federal fiscal year Two pronged Additional Bonds Test providing 4.0x MADS coverage “Double-Barrel” pledge of nearly than $1.2 billion in annual Net CTF Pledged Funds Strong debt service coverage Requirement in both 1998 and 2010 Trust Agreements that debt service payments be funded with the trustee a year in advance Long history of low volatility in federal transportation funding

47 Conclusion

SLIDE 57

57

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 CTF revenue pledge provides 10X or greater coverage for the ABP GANs even after full ABP 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

48 Conclusion

SLIDE 58

• 7. Financing Schedule

Route 20 Over MBTA Bridge

SLIDE 59

59

Transaction Timeline*

 The financing schedule calls for the transaction to price and close in November

October 2013

S M T W T F S 29 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

November 2013

S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Financing Schedule*

Date Event October 18th Mail Preliminary Official Statement November 5th CTF Bonds Pricing November 6th GANs Pricing November 12th Pre-Closing November 13th Closing

Accelerated Bridge Program Financings, 2013 Series A

* Preliminary, subject to change 49 Financing Schedule