Moody's Investors Service Monday revised its outlook on Rhode Island to stable from negative and affirmed its Aa2 general obligation bond rating.

The move, which affects $2.2 billion in net tax-supported debt outstanding, comes ahead of the state's mid-October sale of about $208 million of consolidated capital development bonds. About $162 million of that amount is a refunding.

Rhode Island, tied with Nevada for the state's worst unemployment rate, has been grappling with a controversial state employee pension overhaul, as well as the 38 Studios moral obligation bond financing fiasco.

"The change in outlook to stable from negative reflects the state's success in shoring up its finances through the maintenance of adequate available reserves and improved liquidity," said Moody's, which also cited the reduced risk of pension overhaul reversal, the lessening of negative demographic and economic trends, and less risk of economic intrusion from Massachusetts gaming.

Moody's also affirmed the ratings on roughly $1.7 billion of notched lease appropriation, certificates of participation, and moral obligation bonds, as well as Rhode Island Health and Educational Building Corp. intercept programs.

Rhode Island will use the new-money component for various capital purposes.

Full story to follow.

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