Government Borrows An Additional $180 Million

June 26, 2012

[Updated] The Bermuda Government today [June 26] raised $475 million in 10-year bonds at 4.13% interest. $295 million will be used to refinance existing debt at a lower interest rate, with $180 million representing new debt.

This followed a roadshow by the Government across Europe and the United States which included Financial Secretary Anthony Manders, Director of International Business Travis Gilbert, Economic Advisor Hasan Durham, Director of Budget Tina Tucker and other senior officials in the Accountant General’s Department and the Attorney General’s Chambers.

The Finance Ministry said, “It should be noted that the use of proceeds included the refinancing of more expensive and shorter term debt with $180 million representing new debt. The refinancing of a $200m 4.95% loan facility due 2014 will result in savings for the country over the next 2 years.”

“The transaction achieved the lowest fixed rate bond yield ever for the Government of Bermuda, thereby substantially lowering the Government’s debt cost burden as well as its cost of funds moving forward,” said the Finance Ministry.

The Finance Ministry said the distribution went to the US [67%], Europe [30%] and Asia [3%]; and by investor type to Fund Managers [75%], Insurance/Pension Funds [12%] and Private Banks/Banks [10%].

Over 106 investors placed orders including from Austria, Belgium, Bermuda, Brazil, Chile, France, Germany, Hong Kong, Israel, Italy, Luxembourg, the Netherlands, Singapore, Switzerland, the UK and USA.

The final orderbook of $1.3 billion [4x oversubscription] enabled the Government to both tighten initial price guidance and upsize the transaction, the Finance Ministry said.

The deal was announced at 9:55am in New York, and the Finance Ministry said it attracted international demand of almost $500 million within one hour.

This morning Fitch Ratings released a statement saying they have downgraded Bermuda from ‘AA+’ to ‘AA’. “Bermuda’s debt/revenue ratio at 150% in 2011 is above the AA’ median, and is deteriorating faster than its peers.”

In the 2012 budget [PDF] Premier Paula Cox said the deficit would be $172 million, which Government proposed to finance “in part by the issue of a local bond at a competitive rate of interest.”

The full statement issued this evening by the Ministry of Finance follows below:

The Ministry of Finance borrowing strategy is set well in advance of a given financial year taking account of long term capacity to repay debt, the view of debt capital markets, the borrowing requirement signaled by planned capital investment in infrastructure for Bermuda’s sustained future and other important policy factors

As announced on Friday June 15th, 2012, the Bermuda Government conducted meetings with domestic and international investors to provide an update on economic/fiscal developments in the country, and also as part of its process of evaluating market conditions and potential funding opportunities to address its borrowing requirement as announced in the National Budget Statement for fiscal year 2012/2013.

An effective, focused and well-timed roadshow by the Government across Europe and the United States successfully educated a variety of accounts on the credit, and despite a large degree of competing supply in the market (9 other Investment Grade deals launched in the morning) the transaction attracted healthy demand and the attention of the world’s top investors.

The Government team that was involved in the Road Show were: Anthony Manders (Financial Secretary), Travis Gilbert (Director of International Business) and Hasan Durham (Economic Advisor). The Government team was also supported by Tina Tucker (Director of Budget) and key senior officials in the Accountant General’s Department and the Attorney General’s Chambers.

The Ministry of Finance wishes to thank HSBC Bank of Bermuda, HSBC Securities (USA) Inc., Butterfield Bank and Milbank Tweed (USA attorney) for their roles as strategic partners in helping to shape a very positive outcome for the Government of Bermuda in this recent issue of a public offering in the global markets.

Also it should be noted that the use of proceeds included the refinancing of more expensive and shorter term debt with $180 million representing new debt. The refinancing of a $200m 4.95% loan facility due 2014 will result in savings for the country over the next 2 years.

Highlights of the transaction are as follows:

  • On Tuesday, June 26, 2012, the Government of Bermuda raised USD475 million in 10-year bonds at an all-in yield of just 4.13%;
  • The transaction achieved the lowest fixed rate bond yield ever for the Government of Bermuda, thereby substantially lowering the Government’s debt cost burden as well as its cost of funds moving forward;
  • The low pricing and very large orderbook confirmed that the markets continue to have a very favorable view of the Bermuda credit story despite ongoing economic challenges and the general volatile backdrop stemming from the European debt crisis;
  • The deal was announced at 9:55am in New York, and had attracted international demand of almost $500 million within one hour;
  • Final orderbook of $1.3 billion (4x oversubscription) enabled the Government to both tighten initial price guidance and upsize the transaction;
  • Distribution went to the US (67%), Europe (30%) and Asia (3%); and by investor type to Fund Managers (75%), Insurance/Pension Funds (12%) and Private Banks/Banks (10%);
  • Further expands Bermuda’s international investor base, with over 106 investors placing orders including from Austria, Belgium, Bermuda, Brazil, Chile, France, Germany, Hong Kong, Israel, Italy, Luxembourg, the Netherlands, Singapore, Switzerland, the United Kingdom and United States

Priced at a modest 25bps new issue premium above Bermuda’s existing public debt curve, and an approximate 100bps lower than the existing Cayman Islands public curve.

“The Ministry of Finance reiterates that this release does not constitute an offer of securities for sale in the United States. Securities may not be sold in the United States absent registration or an exemption from registration.”


Update 10.54pm: The PLP released a statement saying that “The PLP Government saved Bermudian taxpayers $3 million thanks to a well executed debt refinancing that secured the lowest long term bond rate in Bermuda’s history.” They also noted that “contrary to some media reports, Bermuda’s net debt now stands at $1.4 billion.”

Junior Finance Minister David Burt responded to the refinancing, “Following this offering our debt to GDP ratio will stand at 24%. Bermuda’s Debt to GDP ratio remains among the lowest in the industrialized world. The United States, the United Kingdom, Germany, France and scores of other highly developed democracies retain significantly higher debt burdens than Bermuda.”

“These are challenging times for the world and for our Island, but, I’m pleased that despite these challenges, the PLP is investing in Bermudians by providing funds for continued infrastructure investment and vital programmes such as DayCare and FutureCare. This combined with the government’s freeze in spending will continue to protect public sector jobs and support our economy as we head towards recovery,” concluded Senator Burt.

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  1. Limey says:

    Who do Bermudians think have bought into these bonds with 4.13% interest, the average hard working bermudian, no!! The governemnt is raising money to cover the debts by enabling the rich and wealthy to buy into these bonds, making them a handsome profit!! And at whos expense, the average hardworking joe public taxpayer!!

    • RUFKM says:

      Any Bermudians can buy the bonds, they are publically traded.

      • Truth (original) says:

        That’s incorrect. Institutional investors bought in. Not individual investors.

    • Baltic Fury says:

      Hang on, I think the point here is the bit about “the gvt is raising money to cover the debts”….isn’t that the issue? That our Government spirals further into debt. Lord knows how long this mess will take to recover. I don’t really care who is buying them – do you think the money markets will buy to lose?

    • wizeazz says:

      We owe $50,500 for every man,woman, and child on this little rock.Can everyone please send your check to Ms.Premier in order to get us back to square one.
      So if there are 4 people in your family that will be $202,000.00
      Oh,yes if you are a civil servent or member of the sitting government you can put the payment on your government credit card.No backup necessary.

  2. Swing Voter says:

    I hope we can pay it back….or the IMF will not only tell us, they will order us

    • david rose says:

      It is disappointing that locals are not given an opportunity to participate.

      Left out

      • What Options says:

        I don’t think that’s correct. Was offered locally first.

        • And yet, to quote the article, 67% went to US, 30 % went to Europe and 3% went to Asia. That makes 100%. If it was indeed offered locally, then it seems no one had faith enough in our Govt to invest anything. Seems local investors are pretty savvy.

    • SHOWANAX says:

      I think that every Bermudian should download or rent a copy of the documentary Life & Debt which is a documentary about Jamaica and how their independence and need to borrow money from the world bank, IMF etc, turned them from I vibrant, independent and strong country to one that got itself into trouble because of its need to borrow and then the inability to pay off their debt (interest).

      A must see for anyone that does not take this seriously and thinks we can easily overcome this, without some real changes and tough choices. It used to be available for rent at Phase One video but they are now closed.Im not sure if Leisure Time or one of the other rental places or perhaps itunes has it. Its not on itunes but it can be found on some torrent sites.

      Here is the link to the website to learn more:

  3. joe says:

    Bit like kids in a candy store. Keep on borrowing! No matter that it is for salaries and we are being downgraded. Eventually we locals will have exchange controls and devaluation to pay this off. You go girl!

  4. RUFKM says:

    So, everyone said our interest rates will go up after fitch took us back to our 2006 rating, and we have the Lowest Bond Offering in Bermuda history.

    Maybe things aren’t as bad as people in the OBA would have you believe.

    • SHOWANAX says:

      There not as bad????? Really, how much do you get PAID to post that! Wow, you are either working for, supported by, or related to someone in goverment or incredibly ignorant to the facts. Let me make it easy for you or others to prove me wrong. Pick at topic and tell me when in Bermudas recent history since that things were worse!If you cant think or were not alive that far back, how about going back, lets say 13 years!!!!

      International Business
      Employement or rather unemployment
      Public Safety
      drug and Alcohol Abuse
      pick a category, any ONE or think or your own and remember let us know how Bermuda is better TODAY for ALL of US, not just you.
      Industrial Action

      • We Like says:

        You must be living under a rock. If your life comparatively has gotten “worse” i’m sorry, but a whole lot of people’s lives have gotten better.

        Better Jobs
        Better Education
        Better Housing
        Better Community
        Better Infrastructure
        Better Facilities
        Better Quality of Life

        Only thing not better is the flipping cost of living!

        • Serious says:

          Surely you jest!!!!!!!!!

        • More with less says:

          Just wait until your civil service job HAS to be cut, you won’t be singing praises anymore.

        • Curious says:

          Better jobs? Bloated civil service and International Business enduring hardest years in recent history.

          Better education? Bermuda has graduated 50% of students from Berkeley and Cedarbridge for the last 20 years. You wonder where all our gangsters come from?

          Better housing? Rental prices lowest in a decade, real estate market frozen due to hosuing licenses required (recently reversed).

          Better community? How many shootings have we had in the last decade?

          Better infrastructure? Yes. But at what cost? Correia Construction and cronies are laughing all the way to the bank.

          Better Quality of life? See above.

          • Walla Walla says:

            Better mean like the 4M dock that is crumbling.

          • Spilt milk says:

            Enough said…… I would just add that if we (gov of bda) were making enough money then we would not have to resort to this.. While a good move it was out of necessity…..

        • Lets Hope says:

          You are making a joke Right?

        • Walla Walla says:

          Better Jobs, really LOL – how many people did you know that were out of work 13 years ago- and how many do you know today.

          Better Education??? your kidding me right – have you seen the number of graduates? Have you seen the numbers of unqualified “teachers” that were teaching?

          Better Housing? I agree Dr. Brown does have a much better house than before he became involved in politics. I heard its lined in cedar? Oh, and there is a very nice one one T-Street as well…wasn’t there a story behind that too.

          Better Community? Okay you got me there. More of us are spending quality time with our families indoors because if we go outside WE MAY BE SHOT.

          Better infrastructure? Name one that wasn’t lined incontroversy

          oh wait..facitities…you mean the Berkely Project that cost us 2.5X over budget. Who “realy” benifited from that Proactive / Berkely deal…anyone, anyone???

          Maybe your talking about the TCD building and emmission centre that we didnt really need. Who ‘built” and “runs” those , where was that bid to tender ..anyone, anyone????

          Better quality of Life? I admit, it was nice being on the couch for the last 4 months while my wife works. She might argue withyou on this one though.

          How can I get a job as a paid blogger?

        • WillSee says:

          You are kidding who?
          So many people out of work,businesses losing money,our young people getting killed ect.The list goes on and on.

        • LOL (original TM*) says:

          With that you are completely written off the sanity list.


        • The nitty gritty says:

          No we are not living under a rock…yet, but 4 more years under the yoke of your mates will put us all there. Only members of the crony club as you seem to be,, have seen their lives get better so word to you, bess keep your positivity in check with OUR reality lest you give away just what has made you so damn well off!

    • GMS says:

      If you want to judge how “good” the interest rate on this bond issue is, you have to look at the spread to a given benchmark and compare that to the spread for past bond sales. The overall rate means little in this context. The interest rate yield curve moves up and down all the time. It is all about credit spread.

      Sure, the lower rate means a lower interest payment each year than a higher rate, but the OP isn’t making that point.

      • GMS says:

        Some quick numbers:

        26Jun12 Bda Govt Bond $480mio Yield: 4.13%
        US Treaury 10y Yield: 1.66%

        Spread = 247 basis points

        13Jul10 Bda Govt Bond $500mio Yield: 5.60%
        US Treasury 10y Yield: 3.15%

        Spread = 245 basis points

        So you can plainly see that yesterday’s bond issue, despite a much lower yield to maturity, was actually worse priced, credit-wise, than the $500 mio bond issue launched back in July 2010. It’s not much, 2 basis points or 0.02%, but it is still worse.

        So the point is that you need to dig a little deeper to get the facts. Don’t simply parrot what the Premier may say knowing that most Bermudians won’t know any better.

        • We Like says:

          Good Point, I think the fact borrowing is just as expensinve as before says something. but must be good to raise at 4.13%.

    • Soooo says:

      Did you ever think that Fitch downgraded Bermuda because of this Bond Offering? This offering was a done deal long before the downgrade took place.

  5. Amazed says:

    When u are borrowing millions me thinks we are in trouble

    • What Options says:

      Or it means you are smart by taking advantage of low interest rates.

      • Baltic Fury says:

        As a guide its about 8 times the base interest rate in US/UK. Its not smart.

      • Walla Walla says:

        If you save money and owe nothing, you cant beat an interest rate of 0% when you owe 0.

  6. Pay it back??? says:

    There’s a reason these bonds are paying what they are.

    At a full 3 points over the world regards them as crud. [For a comparison, look up Walmart bond yields - they're a full point and a quarter lower].

  7. media says:

    So I assume that the meetings with domestic and international business last week is in preparation for additional borrowing next year…because there will be more needed…

  8. Sandgrownan says:

    Bermuda is officially sunk. How exactly will the debt be financed? With what?

    Well, they finally did it. They f&$ked Bermuda. Took a bit longer than predicted, but they did it eventually. How they sleep at night is beyond me.

  9. Truth is killin' me... says:

    I know what I’m doing at the next election!!! HEAR ME NOW SELASSIE!!!!!!!!

  10. Reverend Pastor says:

    Nothing less than a dire situation – wonder how she’ll pass this off to the kool-aid followers.

    There should be a law against being stupid enough to vote for PLP again!

    • Reverent Pastor's Brother says says:

      @Reverent Pastor…..Yeah….pack your bags and get out of here…so called person of the Lord….if the PLP is stupid, what is the OBA ….hopeless?

      • Hmmmmmmmmm says:

        The OBA is YOUR only hope. The PLP in its current form is DEAD.

    • Rev Pastor's brother says:

      Yeah sister Pastor, and what would the OBA/UBP do? Mr. Richard recently said on radio talk show “HE too would borrow money”…so any one that votes OBA must also be silly, dizzy and stupid ah????

      • Walla Walla says:

        He would have to do so as a response and the effect of what has gone on over the last 13 years. The difference is that he might borrow because someone else has been irresponsible. You would prefer that the iresponsible ones stay in power.

      • Pastor Syl Hayward says:

        Disclaimer: Neither Reverend Pastor nor Reverend Pastor’s brother are me or related to me.

  11. What Options says:

    Not bad Government. 4.13%, that’s pretty flipping low. Well done. Better to borrow than to throw people out of work!

    • Rick Rock says:

      High government debt is the best route to 25% unemployment. Look at Greece and Spain.

      You people need to open your eyes. Bermuda used to run at $150m debt in total. Did that for years. She just increased the debt by $180m without blinking. It’s like no-one even notices. And the paid bloggers and sheep say idiotic things like “better to borrow than throw people out of work”. You really think its free money don’t you.

    • Mussel Pie says:

      You’re not convincing anyone on here. You sound like you’re afraid to lose your civil service job and trying to justify the bloated government salaries. It’s not working.

    • Goose says:

      4.13% is low according to whom? The bond offering was 4x oversubscribed! That means that we could’ve taken it lower.

    • WillSee says:

      People are losing jobs every day in the private sector.

  12. Connect says:

    I’ve never quite understood government bond issues. Are they collateralized and if so, by what?

    • sandgrownan says:

      You. They’re banking (no pun intended) on you paying it back.

      Ta da!

      • Connect says:

        I would “assume” that when one takes on such debt that you would need to satisfy the issuer(s) of your ability to repay, either through having a sufficient stream of future income or, if need be, through the potential liquidation of assets.

        A government, say Canada, would own millions of acres of crown land, thousands of buildings, tangible facilities, and stakes in crown corporations. I am not sure what Bermuda has in this respect; beyond land. There is income, but it seems to be dwindling and outflows currently exceed inflows. One would think that some form of rational plan was presented to the debt issuers; whether that involved income projections or sufficient assets to secure the debt.

        Its unfortunate about the current debt level, but taking that as being a given, the refinancing portion of this issue seems to be a positive. Regardless of the varying opinions concerning the rate, they did appear to be able to secure a better rate.

    • Zombie Apocalypse says:

      No, there are no assets. it is not collateralized. They assume that you, the taxpayer, will give up your hard-earned money to pay this back for the next 2 or 3 generations.

      • Connect says:

        Good point….thanks. So the ability to tax I guess can be seen as a form of collateral. That makes sense.

  13. OMG says:

    WOW….we at some point not long ago were one of the wealthier countries in the world!!! How much has this dysfunctional government put us in the hole?? Just remember voting public….YOU and YOU ONLY can write your own history!!

  14. media says:

    It’s sad that the PLP like to compare our debt ratio, as in the above press release, with that of the “industrialized world”, heads up we are not an industrial economy. The closest we get to that is the BELCO plant. A rather inappropriate comparison.

    Never mind that our GDP does not translate in terms of tax revenues as all other countries measured against. We don’t actually get the tax dollars from most of the dollars earned that flow through Bermuda…who are you trying to fool?

  15. Hmmmmmmmmm says:

    How could they have saved us $3m. Burt talks smack. We will incurr 10 years worth of interest totalling 200 million dollars. If we back out the 2 year debt replaced , that would have replaced 29 million dollars of interest payments. So let me see….they have cost us net another 171 million dollars in interest payments. By this transaction. They kicked a can down the road at a cost of 171 million dollars in interest and 180million additional new debt….the PLP just cost you and me 351 million dollars whilst claiming they saved us $3 million. Disgusting lies they spin.

    • RUFKM says:

      If you are paying 4.13% as opposed to 4.95%, aren’t you saving money by the difference in interest? Seems pretty simple to me.

      • navin johnson says:

        it would seem simple to you if it were based on the same amount……let me translate…..4.95% on the retired $300,000,000 versus 4.13% on the new $475,000,000 costs more money not less….but you are the governments target audience as you will believe anything……

        • Hey says:

          don’t forget the debt being replaced had 2 years worth of interest payments left v this new debt is for 10 years of interest payments.

      • alsys says:

        Not if you are now paying that percentage on a larger amount of money. Borrowing money from Peter to pay Paul all just to keep the damn lights on is NOT good business sense no matter now much you try to spin it. The thing you are conveniently missing is this money isn’t going towards building new… well, anything, it’s simply going towards OPERATING costs. Which means we cannot afford to operate now unless we borrow, what happens when people stop lending. And they will, they have to. You cannot run a country’s government on someone else’s money without severe consequences.

        It’s pretty simple that our debt to GDP ratio went from under 4% to nearly 22% in 5 years! Name one other place in the world that happened during the same time period?? So this excuse of the global recession is just that, an excuse and a pretty darn flimsy one at that.

        I’d really have more respect for this lot if they could stop lying, stop trying to discredit others and stop denying what is so blatantly apparent to anyone with a brain. I was always told to take responsibility for my own actions. I guess they weren’t.

      • Bermyluv says:

        The refinance of 200M will save about 1.6M per year for the next 2 years. After that it will cost over 8.2M per year for the following 8 years. There’s no mention of what the additional 95M of refinancing was used for, but the debt burden on that portion is over 3.9M per year.

        The new 180M will cost 7.4M per year for the next 10 years. Always good to get a lower interest rate, but if you pile on more debt, you still end up having to pay more. On top of the interest payments, money has to be set aside in a sinking fund in order to pay the principle when it’s due.

        Bermuda is walking a fine line.

  16. Encyclopedia says:

    New debt should have been avoided.
    What is the new debt used for should be clearly informed to the public.

    Has any debt been repaid by internal accruals?

    Debt/GDP is a bad comparison since Bermuda has no manufacturing industry or natural resources.

  17. Economic Developments All: New World Order

  18. jimmy benanz says:

    The reason it is a low rate is because US dollar rates globally are at an all time record low. It is more important to look at the spread above 10 year US treasuries that this 4.13% represents. US Treasuries yield approx 1.63%. To judge if the auction was successful it is this spread that is key. So, 4.13% represents 2.50% above the US treasury yield. I recall the last issue was also at a 2.50% spread. Thus Bermuda’s credit hasn’t detereorated, at least in the market’s eyes,but the coincidental downgrade by Fitch may affect the bonds price going forward.

  19. Keepin' it Real...4Real! says:

    Bda is already 2billion in debt so here is a little video putting that amount into persective for those of you who think they know:

    • RUFKM says:

      Bermuda isn’t 2 billion in debt, 1.4 Billion in debt. C’mon son!

      • Fish R Man says:

        If you include the unfunded pension fund…around $800m that is well over $2bn. Not to mention the $1.4bn figure is from YE 2010…we are a whole year and a half past that so the real amount is likely much more. The Gov keeps staving off the auditor general to hide the facts so people like you will think that things are better than they are.

  20. The road to hell says:

    How much more debt does Bermuda actually need? Every man woman and child will pay the price for generations, down to the mis-management of government. The working population of Bermuda are now becoming ‘new slaves’ to the uncontrolled debts of the government.

    Welcome to the ghetto, Bermuda – it’s not going to get any easier when you pile up $180m new debts and re-finance a further $295m old ones… a down turn…..while business is leaving the island taking its workers and money with it…..and a downturn in tourism……and all the while the government continues to overspend year on year.

    Cut your cloth to suit your budget. A champagne lifestyle on a sparkling water budget never works. Simple economics – you’d think the Finance Minister/Prime Minister would have been taught that back in high school.

    • Mussel Pie says:

      “Cut your cloth to suit your budget. A champagne lifestyle on a sparkling water budget never works.”

      That’s why I drink tap water.

      • The road to hell says:

        Same here my friend……wonder when Paula last did the same?

    • Johnny says:

      I just don’t get it. In this time when the whole world is having financial problems, you all can say that the Govt. Is solely to blame for Bermudas issues. I think the reason I don’t have any money is because local business drains all my cash. From a food perspective, it cost almost $20 a day per person to eat food (and this is from the grocery store). So in my family of 4, if i wish to eat proper meals, (fresh food) I have to pay out $60-$80 per day just to eat. Then I have to pay $120-$150 to gas up my car (that costed $40,000) and that don’t even last a week. ETC. Etc. Etc.

      One thing I will give you all, is that Bermuda has become costlier since the PLP gained power. Seems that most big local business have jacked up their prices astronomically since their friends are no longer in power. How about this, In 2002 a large carton of fresh milk costed $3 and change, now it almost $7 in some places.

      Basically, local business has raped bermuda dry. In all other countries the cost of survival is nowhere as high as in Bermuda. But I guess it’s PLP’s fault cause they own Marketplace, Lindos, Gorhams, etc.

      • joe says:

        You are an incredible ignorant person, or perhaps just mischievous. Love it when people who have understanding of finances spout off with ill logic trying to make childish points. I guess there are a lot of people who believe in the claptrap you write. Sad day for this country that we have somehow forsaken education for here-say and ignorance. I, for one, believe there is no salvation here. Bermuda will sink into Third World poverty withing a decade and we all will have nothing. Like islands down south, either you pick up a tray and serve, or get out. And all because we have created some sort of class war.

      • media says:

        No, people are not saying the Govt. are solely responsible. But just as Kim Swan is saying this morning the Govt. failed to save for a rainy day and has left us all in the weak position we are in now.

        You obviously have little knowledge of how business works and the extremely high cost of doing business on this remote island. If you think you can do it better why not try it. Businesses like you mention run on very low margins. The profit comes from the volume of sales. Right now with a few thousand less people actually living in Bermuda revenues are declining and it is in most cases a matter of just trying to survive this and hoping to come out the other end still in business.

        Like I say, everyone expects to make $1000 a week but nobody wants to pay the price of what the cost of goods are. You can’t have it both ways.

      • Familiar says:

        I don’t believe that the government is solely at fault for the position that we are in, but I do believe they need to accept the majority of the responsibility for where this country is financially.

        You’re quite correct that there are businesses that continue to overprice their merchandise, but there is also a local misperception about the cost of running a business in Bermuda. Let’s just forget about the cost of importing things to Bermuda, just look at what Bermudian employees expect from their employers. High waves/salaries, great benefits, tons of sick leave… those are all business expensives that have to be factored into the cost of the product.

        Bermudian’s resounding cry of “I can get that cheaper in the US” is also part of the problem. Yes, it’s accurate, you can, and there’s a reason for that. Lower wages/salaries, limited importation costs, lower overhead in general. And for anyone who works in Bermuda and consistently makes their purchases overseas, well, they’re part of the problem. You can’t keep taking money out of one economy and putting it into another without seeing an effect.

        And for you in particular, Johnny, did you really need a $40 thou gas guzzling vehicle? There are certainly less expensive, less gas guzzling vehicles out there that can cater to a family of four.

        If people stopped purchasing extravagantly for luxuries, they’d be better able to afford the necessities, and businesses would have no choice but to think about what they bring in to sell.

      • Goose says:

        What are you eating if it costs $80 to feed your family of four? Surf and turf?

      • Walla Walla says:

        The whole world IS NOT having troubles. Just the countries that spent like there was no end of money coming down the pipeline. You know those who governments acted irresponsibly.

      • LOL (original TM*) says:

        No but the PLP tax them don’t they……………

        you guys make me LOL voting OBA anything is better than a race baiting bent on revenge, lowering the standard of living, taxing us more to pay for nothing tangible that yields an even fair return …….. I know you you PLP blogers stopped reading after “PLP tax” denial is a bi$@#!

  21. M.P.Mountbatten JP says:

    We used to wear our hat proudly on the top of our head . Nowadays it’s attached firmly to our hand , as we go abegging from any-one who will lend .

  22. Serious Though says:

    What is the TOTAL Bermuda national debt ??
    and how are going to pay for it??

    anybody have a plan, let’s hear it.

    • Curious says:

      Fix education.
      We have shifted to a financial services based economy in the last 25 year (yes that includes the UBP) and nobody has managed to fix education and graduate more then 50% of our senior school children. Bring back the technical college and let the older generations of workers train the youth. Bring back the city guild schemes. More business means more business tourists as well.

      It might be rough for a generation but when our children are able to populate the jobs in International Business we will stop having problems with immigration (more qualified locals), crime (actually having a job), social issues (never seem to matter as much when people have money in their pocket), debt (higher tax paying citizens, more of them).

      I just want to see somebody/anybody put forward a 10 year plan and stick to it.

    • RUFKM says:

      1.4 billion to be exact.

      Pay it back over time just like a mortgage. However Bermuda’s economy must grow and our tax revenue has to be higher than our expenditure for this to happen.

      Right now that looks tricky. I don’t like the debt at all, but as much as it hurts, I think it makes more sense to borrow than it does to have mass layoffs which only make our economy weaker in the short term.

      We need growth in the economy which means growth in taxes whichs means we save our excess revenue to pay back the bonds when they come due.

      • Encyclopedia says:

        Revenues should be greater than Expenditure to generate Surplus to pay down debt. The only income stream left is a Casino and that is the only option to generate a surplus. Should have been done years ago.

        • LOL (original TM*) says:

          Thats what they want you to believe. Why do you think they have been pushing for gaming…. ultimatly it will become forign owned and will do nothing but sifon funds out of Bermuda w/ a mild tax revenue.

          LOL might even see more money laundering…..

      • navin johnson says:

        it is far from 1.4 billion when you have a drastically underfunded pension system particularly if you want to suspend further contributions…you are of the robbing Peter to pay Paul school and you cannot raise taxes to grow revenue….ask your beloved Premier how that worked out last time….wait I’ll save you the trouble as it accelerated IB’s departure out of Bermuda which is why she reversed it a year later…..the PLP Government will just continue to try to refinance debt as it comes due and add what they can to pay salaries and votes until they cannot do it anymore…some level of austerity has to come into play here as well as drastic cuts in travel and cars and everyother useless expenditure….

      • The nitty gritty says:

        “Pay it back like a mortgage”?? What planet are you from? First off, it’s way past 1.4 which they cannot even pay the interest on much less principal and more importantly they have taxed businesses past the breaking point already. There is no more leeway to increase taxes on business without seeing businesses close, resulting in more layoffs!
        Get it now? ..probably not.

  23. Tolerate says:

    Amazing, writers on here going back and forth on what a sweet deal this was, or how terrible this is. Who is the best finance wiz? Break it down for people without the finance backing to understand.
    We have a Government that has made every excuse as to why we are in such deep debt. Blame it on the depression, poor financing (wait they have not admitted that one yet), poor running of Government Projects (another one they would not admit to), or whatever.
    The magic question is; “what is currently being done?” Borrowing more proves nothing is in place to halt this increase in debt. While we can accuse the OBA or the UBP of also having no solution, we KNOW this current Government and Finance Minister DOES NOT!
    This is NOT an assumption, it is a FACT. How do you come with your chest in the air bragging about the great financing you got for money you have “BORROWED” YET AGAIN?

  24. Noel Ashford says:

    All – This goes to show how Easily MANY of you are duped by this INCOMPETENT bunch of ’40 thieves’ to quote what many used to call the UBP…

    Long story short… This is a borrowing vehicle – they need to repay this in 10 years… The economy is tanking and they are borrowing EVEN more. Yes they refinanced some EXISTING DEBt, but they borrowed even more.

    Wake up… countries go Bankrupt. thats the Path the PLP is on with us right now. Throw these clowns out – they have no CLUE what that are doing clearly as the architects of this mess.

    Stop listening to their spin and see this for what it is – increased debt – AGAIN!!! Whats next.. raising the debt ceiling again? LOL… so sad. I am thankful i can work elsewhere… Bermuda is a waste of time right now. The good days are over.

  25. Agree to diagree says:


  26. TheFuture says:

    I note the continued SPIN attempting to show Bermuda debt to GDP ratios are mu h lower than other industrialized countries. This is said entirely out of context in that these same countries have a vehicle available to them to repay debts that we do not. It is called printing more money. We are not borrowing in Bermuda dollars but US. We have repay in US. America, the UK etc. are in a different stratosphere when it comes to the ability to inflate their way out of debt. We are not. Bermudian leaders and followers need to get more sophisticated knowledge about finance.

  27. Triangle Drifter says:

    PAULANOMICS 101: When you have maxed out your credit cards & do not have the means to pay them off… problem.

    Solution: Get another credit card, with a higher limit, pay minimums on existing cards so as not to default, rinse & repeat, rinse & repeat.

    Leave the debt to later generations to deal with. No problem.

  28. media says:

    I think the lack of real bold moves to really make an attempt to cut where it counts is the looming election. To do stuff that would actually affect people would make it even more unlikely that the PLP would be reelected. They have to keep the people happy for now. So we will see little for now apart from hotel announcements and the like that sound positive but offer very little in terms of jobs and inflow of money for the immediate future. To make any real dent on the economy the Government actually have to do something. It’s amusing to hear people criticizing the OBA for the lack of plans to get us out of this mess, when the PLP have offered precious little themselves and they are presently at the helm.

    The PLP have very little credibility in the business community right now, yes the Premier is trying to make nice with them all after a very strained relationship, but IB has been left with a very bad taste in their mouths and have not forgotten it. An OBA Government would immediately have the confidence of the business community and from there things will begin to grow again. It’s really the only option for us to see any growth in the economy for the foreseeable future. Confidence in who is running Bermuda has a significant impact on money coming here and people doing business here. At the moment it is lacking…

  29. interest says:

    $475,000,000 at 4.13 % interest rate over 10 years.

    In other words in 2023 bermuda will owe the original $475m and the $236,954,588.78 in interest. A total of about $712m. 2 years of $295m at 4.95% is just about $30m. An extra $206m in interest. Thats good?

  30. Pastor Syl Hayward says:

    I have just two quotes to share: “There are none so blind as those who will not see, none so deaf as those who will not hear.” And my mother’s favourite before she laid on with my dad’s leather belt, “If you can’t hear, you have to feel.”
    All those who weren’t feeling Craig Cannonier will be feeling something else PDQ.