Concerns over rising interest rates hitting almost $500 million of Bermuda debt refinancing over the next ten months have been admitted by the Government.

Arianna Hodgson, the Junior Minister of Finance, made the comments when responding in the Upper House to fellow senator John Wight when he warned payment hikes could be “substantial”.

With Bermuda’s total debt standing at $3.2 billion, Mr Wight expressed fears about the issue as the island moves to refinance $140 million of debt in December and another $354 million in March next year.

Ms Hodgson told the Upper House: “Of course there is a concern concerning the interest rates, and the fact that, obviously, they are likely to increase.

“And what we can confirm is that the Government is looking to pursue all options to obtain the best rates possible.”

In the February Budget Statement, David Burt, the Premier and Minister of Finance, said there were market risks, but insisted the Government would ensure “we can refinance our debt at historically low interest rates”.

Mr Wight raised the issue after the minister gave a statement regarding a favourable report on the island’s financial reputation by leading ratings agency Standard & Poor’s.

The independent senator said: “With $140 million of debt being refinanced this coming December, and $354 million of debt being refinanced next March, is there a concern from the Government that we will be paying substantially higher interest rates on that refinancing?”

The $140 million debt comes due on December 12, 2022 and carries an interest rate of 5.73 per cent. The $354 million debt comes due on January 3, 2023 and carries an interest rate of 4.138 per cent.

Mr Wight said the S&P report was good for Bermuda.

He stated: “It is indeed excellent news to hear that the S&P has reconfirmed Bermuda’s sovereign debt rating at A+.

“This is great for Bermuda’s reputation as a world class domicile for international business, and to keep interest rates as low as possible.”

The sovereign credit rating helps to determine the cost of the Bermuda’s debt and its ability to borrow money.

The S&P report said: “Economic activity should support low fiscal deficits with limited need for new borrowing. The Government’s borrowing needs will largely be focused on refinancing upcoming maturities due in 2022 and 2023. We expect Bermuda’s net debt burden will remain low.”

Interest rates have been rising globally in the wake of the Russian invasion of Ukraine, and fears that the US may be heading into recession.

In his Budget, the financial situation saw Mr Burt put back the Government’s aim of a balanced Budget by a year to 2024-2025.

He said: “In relation to the management of its debt, the key upcoming challenge is the need to refinance almost $1 billion in debt over the next two years, with approximately $500 million of it maturing in the upcoming fiscal year.

“It is expected that with continued careful fiscal management as detailed in this statement, the Sinking Fund will be sufficient to finance the anticipated deficits until we achieve a balanced budget.

“However, the current market environment for the required refinancing clearly presents risks in relation to effective management of future debt-servicing costs.

“Interest rates in the US and other key countries have begun to trend higher, with further upward movement expected.

“Therefore, to address those risks, this government will take steps to access the market to ensure that we can refinance our debt at historically low interest rates in line with the recommendation from the Fiscal Responsibility Panel.”