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Government in debt refinancing exercise

As the Government continued ongoing debt management efforts, it announced the commencement of offers for the purchase of its senior notes.

It involves an offer to buy the outstanding 4.138 per cent senior notes due in 2023 and the 4.854 per cent senior notes due in 2024, the two involving principal sums that total more than three quarters of a billion dollars.

The first is for the outstanding principal sum of $353,905,000 with a maturity date of January 3, 2023. The second is for the outstanding principal sum of $402,203,000.

Next Friday, the Government expects to settle up with the existing note holders.

The tender period is now open under normal circumstances for the week until July 12.

To pay for all this, the authorities are arranging the closing of an offering of new notes, settled before, or at the same time of, the closing of the existing notes.

With rising interest rates, there is uncertainty about the difference between the cost of the existing notes and the replacement borrowing.

The Fiscal Responsibility Panel said earlier, and the government agreed in February, that given the scale of Bermuda’s debt, the possibility of a large, sustained rise in global interest rates was one of the most serious risks facing Bermuda in renegotiating debt payments.

Almost on cue, interest rates were pushed up by the Federal Reserve. There have been two Federal Funds Rate increases since March.

Payment shuffle: restructuring public debt

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Published July 07, 2022 at 7:56 am (Updated July 07, 2022 at 7:56 am)

Government in debt refinancing exercise

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