Finance Minister Paula Cox yesterday announced Government's plan to refinance $75 million in debt.

The debt, owed to senior note holders, comes due in June but is to be reborrowed through a ten-year private placement.

Ms Cox said there had been keen interest in Government's request for proposal (RFP) that was sent out to ten local and overseas financial institutions.

The refinancing ? with the $75 million debt being included in the country's current loan facility of $245 million ? is to be led by the Bank of Bermuda/HSBC and the Bank of Butterfield and WestLB as co-arrangers.

She said the interest from financial institutions in the refinancing "attested to Bermuda's high credit rating ? which itself is due to the Government's strong and steady fiscal management".

She added that the submissions had been of a "very high calibre" and from institutions wanting to work with Government "to deliver a timely and effective offering that will allow Bermuda to capitalise on its exceptionally high standing in the international capital market".

Criteria for submissions:

Government said all responses from financial institutions had been diligently evaluated by the Finance Ministry's technical staff, based on the following criteria: experience with Government placement; timeframe to complete; pricing; placement expenses; ability to meet Government's objectives; level of service; reputation; flexibility of financing instrument; quality of RFP response and covenants and other terms.

Questions to Government on whether or not it had considered issuing a bond, when looking at refinancing options, had not been answered by Press time.

Government told The Royal Gazette yesterday that it had considered issuing a bond, but decided to go with the private placement based on the low yield the bonds would have had over the period given Government's credit rating and the current interest rate environment. Leaders from various Island sectors have in recent months talked about the possibility of Government issuing a bond, given that up to $900 million, by estimates, having come into the local economy when Bank of Bermuda shareholders got their pay out in the bank's sale to HSBC.

Government's level of debt:

In this year's budget, Government projected the need to borrow a further $81 million during the fiscal year.

It also put an estimate of total net debt outstanding at the end of that period at $216 million, which is well below the statutory ceiling approved by the House at $250 million. Government has said its policy is to ensure debt does not exceed ten percent of gross domestic product (GDP) but $216 million puts them well below that with GDP standing at $3.9 billion.

Government has projected a current account surplus for the fiscal year of $34 million.