Firm: 38 Studios Default Would Bring ‘Junk’ Status
PROVIDENCE, R.I. (AP) — An independent analyst hired to study the impact of defaulting on the 38 Studios debt predicts Rhode Island’s bond rating would be downgraded to junk status and the business climate would be harmed.
The SJ Advisors report, released Friday, says default would bring increased borrowing costs. The firm says it could also lead to a “contagion effect” that would affect other Rhode Island borrowers and taint the business environment.
The head of the Rhode Island Public Expenditure Council told a House panel Thursday default would cost the state more than the 38 Studios debt. Gov. Lincoln Chafee insists the debt must be honored.
Some lawmakers want the state to default on the remaining $87 million Rhode Island owes from the deal that gave 38 Studios a $75 million state-backed loan.