Gov. Chafee Tuesday answers reporters questions about 38 Studios bonds. Photo by Steve Klamkin WPRO News
By Steve Klamkin and the WPRO Newsroom
Moody’s Investors Service downgraded the RI EDC’s 38 Studios bond ratings Monday, and Governor Lincoln Chafee is continuing to express concern about defaulting on the loans.
“I just think it would be harmful to the long term economic vitality of Rhode Island,” Chafee told WPRO Tuesday. “That’s the message Moody’s is sending. That’s a very, very important message.”
Chafee’s proposed FY 2014 budget allocates $2.5 million towards the repayment of the loans, a number that has to pass through the House Finance Committee tonight.
“No one finds it more distasteful than Governor Chafee to have to make this payment because he was the leading opponent of this whole transaction,” said Director of Administration, Richard Licht.
He said the credit and reputation of Rhode Island are at stake.
“If we fail to make that payment, the action will be severe, swift and drastic, and Rhode Island will pay far more… in the cost of credit than what we have to pay to make this obligation,” he said. “We don’t like doing it, but we have to do it.”
Licht said the repayment is not about 38 Studios, the bondholders or the insurance companies; it’s about the credit of the state and its cities and towns.
“I don’t think Moody’s could have been more clear…that this would be a mistake for Rhode Island to renege on these bonds,” said Chafee. “The message was very, very clear: there will be consequences.”
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Steve Klamkin
