Finance Minister Paula Cox has strongly rejected Opposition criticisms of this week's Government bond issue, and insisted Bermuda's level of debt is "prudent and sustainable".

Ms Cox was responding to claims made by Shadow Finance Minister Bob Richards, who said that the sale was "an expensive exercise" which had postponed Bermuda's debt problem and not solved it.

"Informed observers and commentators commended Bermuda's outcome on its debut offering in global debt capital markets," said the Minister yesterday in a statement.

"It baffles me that the Opposition's comments took no account of the range of dynamics that shape the outcome of a bond sale."

Mr. Richards raised concerns on Wednesday about the fixed interest rate on the bonds 5.6 percent. Ms Cox maintained that the sale represented a good deal for Bermuda.

"On the date of the issue, the bond sale was priced at the tightest end of the market, namely, a spread of 250 basis points [2.5 percent] over the US ten-year Treasury Bill."

The Minister added that government bond sales were influenced by a number of factors and that the coupon, or interest rate, was consistent with other sovereign issues this year.

Ms Cox also insisted that the interest rate on the current bonds was modest compared to borrowing by past governments in Bermuda.

"If we look the Opposition's record of long-term borrowing when the United Bermuda Party was in government, we find that the [interest rate] was higher than what Government achieved on the recent bond. For example, in 1994, the United Bermuda Party Government attracted a rate of 7.59 percent on a senior debt issue. A Progressive Labour Party Government refinanced that facility at a lower rate of 5.39 percent in 2004.

"The simple truth is that no administration in Bermuda has been able to obtain a long-term interest rate on debt instruments below five percent."

Ms Cox went on to defend her Government's spending record, after her Opposition counterpart criticised what he called a "laissez-faire culture in the Finance Ministry".

"It is important to remember that there is nothing inherently bad about debt. Debt is a tool that allows households, businesses as well as governments to transfer cash flow from one period to another. The key is to be prudent and remain within the capacity to repay.

"Bermuda's level of debt is prudent and sustainable. Our debt-to-GDP ratio remains one of the lowest in the world. Our capacity to repay long-term debt is both viable and visible."