Government rolls over debt, sells new bonds

  • Bond sale: Curtis Dickinson, the finance minister (File photograph)

    Bond sale: Curtis Dickinson, the finance minister (File photograph)

The Bermuda Government is buying back up to $500 million of its bonds from investors and selling new debt.

The move is part of the Government’s plan to restructure existing debt, with the aim of securing more favourable interest rates, and issuing new debt to meet the next two to three years of borrowing needs.

The tender offer for up to $500 million of the existing US dollar bonds, with maturity dates between 2023 and 2029, started on Monday, according to a statement issued by PR Newswire.

The offer applies to holders of the $475 million issuance of 4.138 per cent senior notes due 2023; the $550 million issuance of 4.854 per cent senior notes due 2025; the $665 million issuance of 3.717 per cent senior notes due 2027; and the $620 million issuance of 4.75 per cent senior notes due 2029.

The tender offer will expire at 8am Eastern Standard Time on August 17, with settlement scheduled for August 20.

The offer is conditional on the closing of an offering of new Bermuda Government bonds, which is “intended to settle prior to or concurrently with” the tender offers, the statement adds, without giving details on the size of the new issuance.

Asked about the new issuance, a spokeswoman for the Ministry of Finance said yesterday: “In accordance with guidelines from counsel, to ensure compliance with securities laws, we are unable to comment on this matter.”

Curtis Dickinson, the finance minister, told the House of Assembly last month that the Government was planning a bond issuance of between $1 billion and $1.25 billion this year, with some of the proceeds being used to refinance existing debt at more favourable interest rates.

MPs approved the raising of the debt ceiling by $600 million to $3.5 billion last month, a level intended to allow the Government to meet borrowing needs and fund economic recovery efforts over the next two to three years, the finance minister said.

Mr Dickinson said at the time: “This borrowing strategy will allow the Government to lock in historically low rates, potentially reduce our interest expense on some of our current bonds and take advantage of strong current global demand for investment-grade assets.”

He added that the proceeds from the bond sale were intended to finance the anticipated deficits for fiscal years 2020-21, 2021-22 and 2022-23, refinance the credit facility associated with the Caroline Bay project and other credit facilities for general liquidity needs as well as Covid-19 emergency measures, and, depending on market conditions, to “liability manage tranches of existing indebtedness”.

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Published Aug 12, 2020 at 8:00 am (Updated Aug 12, 2020 at 8:11 am)

Government rolls over debt, sells new bonds

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