Government had been considering a local bond issue last year prior to coming to the aid of Butterfield Bank with a $200 million guarantee, it was revealed yesterday.

As reported in yesterday's edition of The Royal Gazette, Peter Everson, chairman of the Chamber of Commerce's economics committee, said the Chamber had approached the Ministry of Finance almost a year ago about the idea of issuing Government bonds to help reduce the cost of funding Government debt and strengthen Bermuda's economic stability, but added that the concept had been rejected. But yesterday Financial Secretary Donald Scott stepped forward to point out that while the issuance of Government bonds had not been implemented yet, it was still under consideration.

"First, the Minister of Finance did not state that a policy decision against Government bonds had been taken by the Ministry of Finance," he wrote in a email.

"We have to believe that Mr. Everson did not hear correctly the Minister's reply. The Minister's response was that a Government bond was something that had not happened as yet but was under consideration."

Mr. Scott stated that the Ministry had been looking at a local bond issue, but the timing was not right given Butterfield Bank's need for capital assistance.

"The bank's preference share issue was due to launch at about the same time and in the end was largely absorbed by the local market," he said.

"Partly as a consequence, Government's own capital raise was conducted in private placement markets overseas."

Mr. Scott said that Mr. Everson's submitted proposal for the idea of Government bonds was favourably received and discussed by the Ministry, who noted that the Chamber's work had served to confirm the Ministry's own findings.

Mr. Everson had previously highlighted the benefits of Government supplementing its traditional funding sources through issuance of the bonds to the public, including the ability to reduce borrowing costs and foreign currency debt servicing payments, while offering greater stability for Bermudian investors through asset diversification.