38 Studios’ EDC bonds yielding more in wake of firm’s collapse
May 29th, 2012 at 3:05 pm by Ted Nesi under Nesi's Notes, On the Main Site
Investors are getting a little more skittish about the 38 Studios deal.
The yield on the first tranche of 38 Studios bonds sold by the EDC jumped last week in the first trade that took place since the company’s solvency crisis burst into public view.
EDC bonds backed by 38 Studios that mature in November 2015 traded on May 23 with a yield of 4.852%, according to data compiled by Bloomberg’s Boston bureau, which first reported the trade. That’s up sharply from the roughly 3% yield the bonds fetched in a previous trade on April 10, according to Bloomberg.
Wells Fargo and Barclays handled the $75 million bond transaction for the EDC and 38 Studios by selling three tranches of bonds on Nov. 2, 2010, to a group of investors that included insurance companies, asset managers, money managers and a community bank, according to the agency.
The $23.685 million first bond tranche matures in November 2015 at a 6% interest rate; the $8.86 million second bond tranche matures in November 2016 at a 6.75% interest rate; and the $42.455 million third bond tranche matures in November 2020 at a 7.75% interest rate.
• Related: Josh Barro: Rhode Island should default on 38 Studios bonds (May 29)
Tags: 38 studios, bloomberg, bonds
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
[...] rates jumped on the 38 bonds. 38 Studios’ EDC bonds yielding more in wake of firm’s collapse | WPRI.com Blogs [...]
The investors are dumping these bonds before they trade flat. This will impact Rhode Island’s credablity in getting money on Tax Anticpation notes(TAN’s). It will eventually impact any type of project that Rhode Island will need to borrow money. Rhode Island will have to pay approximately 15% more to borrow money than a state with an ethical government.