Shadow Finance Minister Bob Richards last night reiterated criticism of the sale of $500 million worth of Bermuda Government bonds.

He told the House of Assembly during the motion to adjourn debate that the debt issue, which offered ten-year bonds at a fixed 5.6 percent interest rate, was heavily oversubscribed because it was too generous to investors.

"All the evidence is there in the market place that we paid a little bit too much for this bond," the United Bermuda Party politician said, adding that wasn't in the best interests of taxpayers. "Bankers have an interest in making it sound like this was a great event but I think the evidence was very clear that we have not exactly distinguished ourselves in this particular bond issue. Investors have, if you like, voted with their feet. The price of the bond has increased."

Mr. Richards spoke on the same issue at a press conference late last week, prompting Finance Minister Paula Cox to defend Bermuda's level of debt and express bafflement at the Opposition criticism.

The public bond issue — Bermuda's debut offering in global debt capital markets — was held to help Government repay a bridge loan covering a revolving credit facility, short-term indebtedness with local banks of around $140 million and to fund ongoing capital expenditure programmes.

It was six times oversubscribed and raised $500 million — $100 million more than expected, according to Financial Secretary Donald Scott.

Government will pay a fixed interest rate of 5.6 percent on the ten-year bonds, amounting to $28 million a year.

Mr. Richards said yesterday the sale was the result of mismanagement by Government. "If we managed our affairs a bit better, we might not have had to go to the market for something this large. What we are doing here is a result of the fact that costs are out of control. There appears to be a sort of culture of spending."

Shadow Education Minister Grant Gibbons also questioned the bond offering, arguing that the repayments could have been done for $26 million a year.

The former Finance Minister said: "I think Government was pleased that the issue was well received. When you pay too much for something you are going to get a lot of takers out there."

He asked whether Government had taken advice from anyone other than HSBC, which managed the sale.

After last night's debate, Ms Cox told The Royal Gazette that new issuers have to pay a premium and laid out the considerations that go into pricing a bond.

These included credit rating, previous knowledge of the issuer, the sovereign credit rating of the issuer, the country size of the issuer in terms of GDP, the size of the offering and presumed liquidity of the offer and the state of the market.

The Minister said other sovereign issuers in 2010 with similar credit ratings to Bermuda, with similar maturities, have offered investors coupons or interest yields from 5.0 percent to 7.5 percent. "The Ministry also routinely obtains information from other banks, not just HSBC, with whom we have relations who provide us with commentary about bond issues and general market conditions," she added.