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Government ‘moving ahead’ with $50m bond issue

A $50 million Bermuda Government bond issue is to go ahead after US legislators hammered out a deal to raise the debt limit — only hours before the country would have been unable to pay its bills.

Finance Minister Bob Richards said: “We are moving ahead, seeing that the Americans have looked the demon in the face and flinched.”

Mr Richards said last week that the launch of the Bermuda dollar bond, part of an $800 million package of borrowing to cover Island budget shortfalls over the next three years and scheduled for this month, had been put in doubt by US brinkmanship over its own budget.

It was feared that a spike in US interest rates if an agreement was not reached would have hit the launch.

But US legislators agreed a stopgap measure last Wednesday, which allowed the US government to meet its obligations and get up to 800,000 public sector workers who had been furloughed back on the job.

Mr Richards said: “We are still working through the details — I'm pretty sure it will be November. We were hoping to for October, but that's looking very unlikely now.”

He added that the bond issue was further complicated by the need to comply with Bermuda laws and local banks, rather than US law and international banks, as is the case with bonds in US dollars.

The US deal followed a 16-day partial government shutdown, which began when Congress failed to agree on a budget — but Congress voted through a deal less than a day before a deadline to raise the $16.7 billion US debt ceiling.

The breakthrough in Washington means the US will be funded to the middle of January next year and extends the US Treasury's borrowing authority until February 7, 2014.

But the deal has not solved impasse between the President Barack Obama and his Democrat party and the Republicans.

Instead, a cross-party committee will be set up to look at creating a long-term budget deal and report back to Congress in December.

Hardline Republicans, mostly associated with the Tea Party, also linked agreement to watering down health insurance reforms, known as Obamacare.

But President Obama refused to negotiate on his signature programme and the law escaped relatively unaltered.

Finance Minister Bob Richards (Photo by Glenn Tucker)

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Published October 22, 2013 at 9:00 am (Updated October 21, 2013 at 6:42 pm)

Government ‘moving ahead’ with $50m bond issue

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