Agencies rate 38 Studios bonds low-risk

PROVIDENCE, R.I. (WPRI) - The two agencies vetting the $75 million taxpayer-backed loan for Curt Schilling's company delivered their verdicts Thursday, deeming the transaction relatively low-risk for investors.

Moody's issued an "A2" rating and Standard & Poor's offered an "A" for the financial instruments, known as moral-obligation bonds, the R.I. Economic Development Corporation said in a statement. The transaction is expected to close early next month.

The Moody's rating classifies the 38 Studios bonds as "upper-medium grade and … subject to low credit risk," its website says. An "A2" is Moody's sixth-highest rating; anything below its tenth-highest rating is considered a junk bond.

S&P's rating is its third-highest, and signifies that the borrower has a "[s]trong capacity to meet financial commitments, but [is] somewhat susceptible to adverse economic conditions and changes in circumstances," according to its website.

The ratings will help investors decide whether to buy the bonds. Barclays and Wells Fargo are currently shopping them to large institutional investors. The minimum investment is $100,000.

The two agencies' full reports on the transaction will be published "in the next few days," and the EDC said copies will be made available to the public at that point.

38 Studios said earlier Thursday that it has signed a lease to relocate from Maynard, Mass., to One Empire Plaza in Providence, which used to be a Blue Cross & Blue Shield of Rhode Island office.

With both the signed lease and the bond ratings in hand, the EDC and 38 Studios have cleared the main hurdles that remained in the way of completing the $75 million bond sale. That would put the transaction on track to be completed within two weeks, according to the timeline EDC officials have sketched out in the past.