The Government is looking to issue savings bonds in a bid to cash in on some of the money from the Bank of Bermuda sale to HSBC, has learned.

In a wide-ranging interview with Finance Minister Paula Cox after Friday?s Budget, Financial Secretary Donald Scott revealed that Government was deep in plans to issue bonds which would have a fixed interest rate.

Bermudians are expected to get a windfall of $900 million out of the $1.3 billion total for sale of the bank ? and investors will have to look for a new stable home for their money.

?There may be an opportunity for the Government of Bermuda to mop up some of that liquidity (from the sale),? said Mr. Scott. ?There is a senior debt issue of $75 million worth that falls due in June of this year, and we are in the midst of planning.?

When asked if he meant the issuance of bonds, he said: ?Yes. We are looking at that now, and very soon we will be putting out a request for proposals to institutions to provide the Government of Bermuda with their view as to how that could be structured. I don?t want to say too much more about that at this time.?

He added that most bonds were for a fixed amount, say $1,000 with usually a fixed interest rate as the standard issue.

?The term could vary anywhere to seven to twelve to twenty years ? something like the Treasury Notes that there are in the US and I believe they have a thirty year instrument that has recently re-gained popularity.

?I don?t think that the term for the Bermuda instrument would be as long as that, probably ten years, but it would again depend on the interest rate.?

He said the Ministry was looking at refinancing a specific instrument, $75 million and would not be likely to go over that figure.

Mr. Scott explained: ?You will be aware that the Government took a decision not to raise the statutory borrowing cap, right now it is presently at $250 million, Government presently has a $150 million credit facility, so there really isn?t too much room, if you have got that $150 that really just leaves you with another $100 million within the existing borrowing cap, so we are not likely to go more than the $75 million.

?But the interesting fact is that the Government also has money in a sinking fund so it is entirely possible that all or some of the balance in the sinking fund be used to pay down that existing instrument.?

Ms Cox said she was not sure just how much of the Bank of Bermuda money would end up as cash coming into the Island?s economy.

?I think a number of people may be have made decision as to whether they are reinvesting or I would be surprised if you see lots of cash,? she said. ?I think really there are people generally at that level they have already made a decision to invest or reinvest, whether in HSBC shares or in other shares as an investment opportunity. But I think certainly those are issues that could impact if there was a large amount of money, but I am not sure that you will see that.?

Mr. Scott also said that it was still difficult to know how the windfall would affect the economy, if at all.

?I think as the Minister indicated there are a number of options that would be before people who are in receipt of the proceeds of the sale.

?For institutional investors, which probably account for a large group that own shares, I would expect that much of that money would be reinvested in to a kind of security and return on investment they saw previously.

?For some of the smaller shareholders, some of them might probably take opportunities to spend part of it, either in the way of buying one or two luxury articles, others may look to pay down outstanding debt. And there is opportunity for others may simply put it on deposit for a period of time to see what opportunities arise.?