The Bermuda Hospitals Board's bond issue received more than double the number of subscriptions it needed for its $14 million offering.

The Bank of N.T. Butterfield and Son Ltd., which is underwriting and selling the eight percent bond issue, will allocate the offering evenly between individual and institutional investors. All orders from individuals who subscribed for up to $50,000 worth of bonds will be filled, according to the bank.

The hospital is raising the money to pay for the new surgical wing of King Edward VII Memorial Hospital (KEMH). The bonds are being issued in units of $2,500 each in Bermuda or US dollars. Plans are for the issue to be listed on the Bermuda Stock Exchange as of June 16 pending approval.

Bruce Sharpe, senior manager of corporate finance at the bank, said the issue was oversubscribed because local investors have a "voracious appectite'' for long term fixed income investments.

Responding to claims that the Hospitals Board may be paying too much interest on the issue, and hence may by buying expensive debt, Mr. Sharpe said the rate reflected local market conditions. The bond issue has a maturity of 12 years with the right of redemption after five years at the end of the offer period.

The Hospital Board will end up paying about $1.1 million a year to service the bond issue.

"The eight percent interest rate was a magical rate for local investors,'' Mr. Sharpe said. "Psychologically it feels a lot higher than 7.5 percent, which is the best rate on five-year deposit products. The Board needed to pay a premium over the five year rate because they needed the money for a lot longer time -- twelve years.'' He said the Board also decided to include a premium in the interest rate as it expects trading in the bonds on the stock exchange to be low, as has been the case with most issues.

"From past experience, they do not expect that there will be much trading activity since most people who purchased the bonds bought them as a long term investment,'' Mr. Sharpe said.

HOSPITAL HOS