The Government has refinanced $500 million in public debt, the Premier announced.

David Burt, who is also finance minister, told the House of Assembly at midnight on Friday that the Government had successfully sold $500 million of 5 per cent ten-year notes, meaning that the Government has borrowed the money for ten years and will pay $25 million per year in interest on the debt.

The deal does not increase Bermuda’s overall debt of $3.35 billion.

Mr Burt said the Government will use the proceeds to pay off a $140 million 5.73 per cent note due in December and a $354 million 4.138 per cent note due in January 2023.

Mr Burt said the refinancing meant the Government will pay an additional $2.3 million per year in interest than it was paying on old debt that will now be repaid.

He said: “While annual interest expense will increase marginally by approximately $2.3 million following this refinancing, it represents only about a six-basis-point increase in our average cost of capital while de-risking short-term refinance risk.”

Mr Burt said the initial offering, priced at an interest rate of about 5.4 per cent, drew initial demand in excess of $2.5 billion, meaning the Government was able to reduce the interest rate being offered by 0.4 per cent to secure the $500 million.

Mr Burt said the successful bond offering saw Bermuda perform better than most bond issuers this year.

He said the termination of the 2022 and 2023 debt means Bermuda now has $400 million in medium-term US debt which will needed to be refinanced by February 2024, while $50 million in a Bermuda-based bond will need to be refinanced three months earlier.

Mr Burt said the Government had ruled out terminating the 2024 notes “given current interest-rate levels”.

He said: “The Government will continue to monitor market conditions and opportunities to refinance these in due course.”

Mr Burt said it had initially been intended to go to the markets to refinance the debt in June, but this has been delayed owing to market volatility, which had seen interest rates soar. He said the decision to wait had paid off as US interest rates steadied.

The Premier said the successful refinancing “coupled with the recent positive assessments by independent rating agencies reinforces that Bermuda is on the right track“.

However, Mr Burt was pressed by the Opposition on why the Government had not gone to the markets before interest rates began rapidly increasing.

Cole Simons, the Leader of the Opposition and finance spokesman, said he had called on the Government to refinance the debt in December, which he estimated could have saved interest of up to 1.5 per cent, or around $7.5 million a year, in interest payments.

“Government has lost an opportunity to get more competitive rates by not moving at the end of last year,” Mr Simons said.

Mr Burt said he could only speak to the period after he became finance minister in February, and conceded rates were lower at the end of 2021. He said he “started the process” after succeeding Curtis Dickinson as finance minister.

But under questioning from opposition MP Scott Pearman, Mr Burt said before becoming minister, Mr Dickinson had initially intended to refinance the debt in November this year, but at the time of his departure had decided to move the process forward because of rising interest rates.

Mr Burt said he could not remember when the process started, but suggested that Mr Dickinson had begun the process of hiring advisers before he resigned his office.

He said that he would provide Mr Pearman with the exact dates when he was provided with them by his technical officers.

Mr Burt said HSBC and Goldman Sachs were advisers and joint bookrunners on the deal while Milbank LLP was the Government’s US counsel.

Mr Burt also thanked the local industry professionals “serving on my public debt advisory committee, who assisted with and fully supported the execution strategy taken by the Government” and the Ministry of Finance team supported by other government agencies.