By Steve Klamkin WPRO News
A national debt ratings agency Monday downgraded the bonds that the Rhode Island Economic Development Corporation issued to support former Red Sox pitcher Curt Schilling's now bankrupt 38 Studios video game company.
Moody's Investors Service downgraded the RI EDC's Job Creation Guarantee Program's 38 Studios bonds from A2 to Baa 1. At the same time, Moody's said that it would review other Rhode Island general obligation bonds for possible downgrade.
Moody's cited uncertainty over whether the General Assembly would appropriate funds to honor the EDC and the state's "moral obligation" to repay bondholders.
"Selectivity regarding which obligations to honor leads us to question our confidence in the full faith and credit of the state and its willingness to honor its other debt obligations compared to otherwise similarly-rated states," Moody's said in a statement.
Governor Chafee said Monday that despite the game maker's bankruptcy, he hoped that the General Assembly would earmark the funds to meet its obligations to repay the 38 Studios bonds.
"Yes, absolutely, I'm very committed to paying back," Chafee said.
"It sends a good signal to investors." "It's a good signal when you say, 'we're going to live up to our moral obligations'," said Chafee.
Superior Court Judge Michael Silverstein is considering motions to dismiss a lawsuit by the EDC against Schilling, other principals in 38 Studios, its financial advisors, insurers and law firms, which seeks to recover millions of dollars to make the bond payments.
