Debate over 38 Studios bond default to heat up

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PROVIDENCE, R.I. (AP) — Rhode Island has shelled out the first appropriated funds for its failed 38 Studios investment, but the debate over whether to default on the rest will soon heat up in the General Assembly.

The state sent the bond trustee $2.4 million for an interest-only payment due Thursday. Lawmakers reluctantly approved the funds last session but need to decide whether to approve the next $12.5 million payment.

House Speaker Nicholas Mattiello says he's waiting for an outside report on the impact of a default. Gov. Lincoln Chafee says defaulting would harm Rhode Island's credit and significantly increase future borrowing costs.

The state's economic development agency approved a $75 million loan guarantee for ex-Red Sox pitcher Curt Schilling's video game company, which went bankrupt. The state remains responsible for some $87 million.

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