Moody's Downgrades the State's 38 Studios Bonds

Jun 18, 2013

Moody’s Investors Service has downgraded the state’s bonds for its failed deal with 38 Studios.  Moody’s has put those and other state bonds under review for possible additional downgrades.

In explaining the move, Moody’s points to uncertainty in the General Assembly about whether to allocate money for paying back the 38 Studios’ bonds. The investors’ service downgraded the 38 Studios bonds from a low credit risk to a moderate risk.

Governor Lincoln Chafee included two and a half million dollars in his budget, as an initial installment on roughly 90 million dollars owed in bonds for the failed video game company. In a statement, the governor said he’s confident the state will – quote – continue to honor its obligations.

Moody’s is less optimistic. It said Rhode Island’s uncertainty about paying back bondholders makes the investors’ service question its confidence in the full faith and credit of the state.

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