The Cayman Islands government has addressed its struggling financial situation through its first-ever bond issue, backed by HSBC Bank.

Premier Hon. McKeeva Bush told Cayman Net News that the $312 million raised would help to complete its schools project and repay government debts.

"A huge portion of the money was owed out to several local banks and was due to be paid back in September but we simply did not have the money," Mr. Bush said. "The balance will go towards funding the schools project and the new government administration building."

The deal, which closed on 24 November 2009, becomes due November 2019 and is worth US$312 million with a yield of 5.95 percent.

Mr Bush said: "HSBC has confidence in our government and they decided to work with us along with the Central Tenders Committee (CTC) and I am satisfied with what we have accomplished."

He said that the deal also restores the public's trust and confidence in the government.

"It restores a strong sense of confidence in the country and it tells us that we can never be complacent."

HSBSC Bank of Bermuda chief executive officer Philip Butterfield, who is chairman of HSBC Bank (Cayman) Ltd. said HSBC was committed to the Cayman Islands.

"We are pleased to see the exceptional progress that HSBC has been making in the Cayman Islands after just over one year of launching its Corporate Banking and Personal Financial Services lines of business," Mr. Butterfield said.

"We continue to be fully supportive of these efforts and are also committed to expanding our banking operations and services in the Cayman Islands as we move into Phase 2 of our strategic plan early in 2010."

According to a press release from HSBC Bank (Cayman) Limited, the arrangement of the bond consisted of a collaborative effort between the Corporate Banking team at HSBC Bank (Cayman) Ltd. and other HSBC personnel in the Global Capital Financing including Latin America, Hong Kong, the Caribbean Syndicate team as well as the Government Sector team in New York and London.

Gonzalo Jalles, CEO of HSBC Cayman said: "Subscribers to the bond issue represented a diversified order book, with US accounts comprising 41 percent of demand, Asia accounting for 30 percent and Europe taking up 29 percent. This created an entirely new investor market for the Cayman Islands going forward and raised awareness of Cayman globally."