First it was Bond Buyer, and now Bloomberg News is using Central Falls’ expected exit from bankruptcy next week to take stock of Rhode Island’s solicitous attitude toward Wall Street and its bondholders. Michael McDonald and Steven Church report for Bloomberg:

Central Falls, the first city in Rhode Island’s 222-year history to go bankrupt, is preparing to exit court protection after 13 months by keeping bondholders whole while raising taxes and cutting workers and pensions.

The financial and political support Central Falls got from state officials makes the case unique among municipal bankruptcies in the past year from Alabama to California. …

The Central Falls approach “is a good sign for bondholders of Rhode Island bonds compared to, say, California,” said Alan Schankel, head of fixed-income research at Janney Montgomery Scott LLC, an investment bank in Philadelphia. …

“You take the bonds being held hostage out of the equation,” said James Spiotto, a bankruptcy lawyer in Chicago with Chapman & Cutler LLP.

To understand why Central Falls’ bankruptcy will likely go down as one of the major policy achievements of the Chafee administration, it’s instructive to read this May 2011 post explaining just how difficult the process was expected to be. For better or worse, depending on your perspective, Central Falls will now be held up as evidence that municipalities can use Chapter 9 effectively to get out from under their financial burdens.

Rhode Island’s high unemployment rate and long list of financial problems make it easy to miss the fact that significant progress has been made by the class of officials elected in 2010 – Chafee (and Rosemary Booth Gallogly) in Central Falls and other municipalities, Raimondo and Chafee with the state pension system, Taveras with the mess in Providence. The most important and toughest task remains, though – fixing the state’s economy.

• Related: Could RI’s pay-bondholders-first law be unconstitutional? (Aug. 12)

(photo: Ted Nesi/WPRI)

Michael McDonald reports for Bloomberg News:

While the court action may take months or years, it’s being closely watched as it may provide guidance in other states where similar legal battles have arisen, said Amy Monahan, who teaches law at the University of Minnesota in Minneapolis. Rhode Island is also unusual because, unlike in California, where court rulings have sided with labor to protect benefits, there is little precedent to guide the outcome, she said.

“Other state courts will watch because they’d love to come up with a way to address this area that makes sense,” Monahan said, calling it “a compelling case.”

“Rhode Island has it all: a poorly funded plan and really widespread changes,” she said. …

The law provided “a dramatic punctuation” to efforts by U.S. state and local governments seeking to control retiree costs as pension-plan losses drained assets, said Ronald Snell, a senior fellow at the National Conference of State Legislatures in Denver. …

“[Raimondo] deserves credit along with others,” said David Walker, president of the Comeback America Initiative, a nonprofit public-policy group in Bridgeport, Connecticut. “She had the courage to campaign on the need for pension reform and to make tough choices, even in the face of significant union opposition.”

Read the rest here. The Newsmakers episode that the article references is online here.

• Related: Study: RI pension bill ‘a good approach’ – and it may be legal (Nov. 4)

(photo: Ted Nesi/WPRI)

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)

Nope, that’s not a typo.

Bloomberg ran the numbers and found Rhode Island to be No. 10 among the 50 states when it came to employment from 2008 through 2010. The only nine states that beat us out were Alaska, the Dakotas, Massachusetts, Nebraska, Texas, Arkansas, Vermont and Pennsylvania.

How is that possible, considering the state has had one of the nation’s highest unemployment rates for years now? Here’s how Bloomberg described its methodology:

To identify the states with the best employment conditions from 2008 to 2010, we used data from the Bureau of Labor Statistics. Each state was ranked on a scale of 1 to 50 on the changes in the estimated total employment for all occupations, the unemployment rate and the annual median salary for all occupations in the state. Scores were created by summing the individual ranks. The higher the score, the better the employment conditions in the state from 2008 to 2010.

I don’t want to be negative, but considering Rhode Island’s present condition it sure is counterintuitive for the state to score that highly in any ranking of job-friendliness. I see two things that helped us, one positive and one negative.

Rhode Island scored a 105; No. 1 Alaska scored a 147 and No. 50 Idaho scored a measly 14. Digging into Bloomberg’s three yardsticks shows Rhode Island’s total employment fell 6.3% from 2008 through 2010; its median salary rose 5.9%; and its unemployment rate increased 50.6%.

The nearly 6% increase in the median Rhode Island worker’s salary was the positive, and something I’d never read about before. A quick comparison with the other states shows salaries in the state posted some of the biggest gains in the country from 2008 through 2010. I’d be interested to learn more about that.

The negative factor is a little harder to explain, but it has to do with Bloomberg’s time frame.

While 2008-2010 captures most of the official Great Recession – it lasted from December 2007 to June 2009 nationwide – it misses an entire year of declining employment here, because Rhode Island began losing jobs in January 2007. If Bloomberg had looked at 2007-2010 instead of 2008-2010, it would have seen Rhode Island’s total employment fell 7.7% (instead of 6.3%) and its unemployment rate rose 134.7% (instead of 50.6%).

Including 2007 probably matches the actual lived experience of Rhode Islanders better. Still, it’s nice to see us near the top of an economic ranking list for once.

Related: Mass., Conn. economies have Rhode Island in the rear-view mirror (June 8 )