HAMILTON, Bermuda — The Government has refinanced $500 million in public debt, the Premier announced early this morning, The Royal Gazette reported on Saturday, July 16.
Premier David Burt, who is also finance minister, told the House of Assembly at midnight that the Government had successfully sold $500 million of five per cent ten-year notes, meaning the Government has borrowed the money for ten years and will pay $25 million per year in interest on the debt.
The deal does not increase Bermuda’s overall debt of $3.35 billion.
Mr Burt said the Government will use the proceeds to pay off a $140 million 5.73 per cent note due in December and a $354 million 4.138 per cent note due in January, 2023.
Mr Burt said the refinancing meant the Government will pay an additional $2.3 million per year in interest than it was paying on old debt that will now be repaid.
He said: “While annual interest expense will increase marginally by approximately $2.3 million following this refinancing, it represents only about a six basis point increase in our average cost of capital while de-risking short-term refinance risk.”
Mr Burt said the initial offering, priced at an interest rate of around 5.4 per cent, drew initial demand in excess of $2.5 billion, meaning the Government was able to reduce the interest rate being offered by 0.4 per cent to secure the $500 million.
Mr Burt said the successful bond offering saw Bermuda perform better than most bond issuers this year.
He said the termination of the 2022 and 2023 debt means Bermuda now has $400 million in medium term US debt which will needed to be refinanced by February, 2024, while $50 million in a Bermuda-based bond will need to be refinanced three months earlier.
Mr Burt said the Government had ruled out terminating the 2024 notes “given current interest rate levels”.
He said: “The Government will continue to monitor market conditions and opportunities to refinance these in due course.” See complete article in The Royal Gazette at https://www.royalgazette.com/politics/news/article/20220716/bermuda-refinances-500m-in-debt/
