Bermuda Government Bonds

The Government of Bermuda has recently been holding meetings with fixed income bond investors, as it prepares to market a potential bond issue to finance a tender for existing Bermuda bonds.

Bermuda Government representatives are reported to have visited potential investors in London, New York, Boston and Los Angeles, and to have held conference calls with potential investors as well.

The bond deal is being done in conjunction with a tender for up to US$150 million for its 2020 and 2023 notes.

Bob Richards, Bermuda’s Minister of Finance, has been quoted by the Royal Gazette as saying that:

We are fortunate that lenders want to loan to us, but that depends on our performance in the conduct of our business. The issue for me is not to try and get money because it is available, but for us to manage ourselves so that it will always be available when we need it.”

Readers may recall that in February 2013, the Bermuda Government amended the Government Loans Act 1978 to increase Bermuda’s legal limit for loans (net of the Sinking Fund balance) from US$1.45 billion to US$2.5 billion.

In June 2016, the ratings agency Moody’s downgraded Bermuda’s issuer and senior unsecured ratings to A2 from A1. The outlook remained stable.The key drivers of the rating downgrade were said to be the following:

1) Despite improved economic prospects, Bermuda’s economic strength continues to lag that of A1-rated sovereigns.

2) Bermuda’s fiscal strength continues to trail many A1-rated peers due to its high interest burden even as its debt metrics have stabilized at a moderate level.

The Bermuda Government was not happy with the downgrade, as one might expect from a borrower seeking to raise additional finance.






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