Rhode Island Gov. Donald Carcieri on Tuesday blasted the state treasurer for attempting to halt a $75 million taxable bond deal.
On Monday, General Treasurer and gubernatorial candidate Frank Caprio urged Moody’s Investors Service not to rate an economic development deal for a video game company that would be guaranteed by the state. Caprio called for a rating to not be issued until after a new administration was in place.
The outgoing governor said in a statement that Caprio was undermining “the positive economic development steps the state has taken in recent years.”
“Businesses and the bond market should not be subject to political posturing,” Carcieri said.
The Rhode Island Economic Development Corp. plans to issue the bonds on behalf of game company, 38 Studios LLC, which plans to relocate to Providence, R.I., from Massachusetts. The bonds would use up most the bonding capacity in a $125 million economic development program passed by the state General Assembly called the Job Creation Guaranty Act.
Carcieri criticized statements by Caprio that the state’s guarantee was risky and could jeopardize the state’s bond rating.
“It is a gross overstatement to imply that the Job Creation Guaranty Act reflects poorly on the state’s financial management or could have an adverse impact on the state’s bond rating,” Carcieri said. “The fact is that a loan guarantee bond of this size or type has no impact on the state’s general obligation or its bond rating.”
The governor said RIEDC entered in the deal after months of due diligence and his spokeswoman, Amy Kempe, said the deal is moving forward.
Wells Fargo Securities LLC will privately place the debt. First Southwest is the financial adviser and Moses & Afonso Ltd. is bond counsel on the deal.