The US financial crisis could scupper a $50 million Bermuda Government bond issue, Finance Minister Bob Richards said yesterday.Mr Richards said that — if US legislators do not end their budget stalemate — higher interest rates could kill off a plan to raise the cash through a bond issue later this month.Mr Richards said: “If there is a spike in interest rates because of this and we haven’t gone to the market with our Bermuda dollars, that might make me change my mind because the Bermuda dollar issue would be more expensive and we don’t need that money right now.”The bond issue is the final element of an $800 million borrowing to cover the Island’s financial shortfall over the next three years.Mr Richards added that the global effects of a default by the US if a budget deal is not hammered out were uncertain.He said: “It’s not really predictable — we’re all hoping that they get their act together.“The market is still signalling they will come to some sort of eleventh hour agreement. I hope the market’s right because if it’s not we could have some very serious effects on the investment market, whether stocks or bonds or commodities. which are all based on US Treasury bonds.”Assets used to back reinsurance are also linked to the US bonds market.Mr Richards said: “Our major business is reinsurance companies who have billions invested in insurance-linked securities — interest rates would rise and they would be looking at unrealised losses in their bonds portfolios.”And he said: “All financial institutions, in one way or another, are connected to US Treasury bonds.”But Mr Richards said a decision made earlier this year to raise up to $800 million in borrowed funds to cover Bermuda’s financial shortfall for three years meant the debt was at fixed interest rates — so would remain the same even if interest rates rocketed as a result of the US defaulting on its debts.He added: “We think that the transaction was well-timed and well-organised. I met investment bankers in the US and they continue to feel we made a very positive transaction.”Unless the US Senate and Congress strike a deal to pass a budget by midnight on Wednesday, the US Treasury will be unable to meet its commitments and the country will fall into a default position.