Bermuda Post

Thursday, Jul 02, 2020

Facility agreements between local financial institutions and the Government of Bermuda

Ministerial Statement To the House of Assembly By The Hon. Curtis L. Dickinson, JP, MP
Mr. Speaker, Honourable Members are advised that on Monday, March 23, 2020 and on Friday, May 22, 2020, the Ministry of Finance successfully executed a BD$20,000,000 and a US$150,000,000 Credit Facility, respectively. Therefore, in accordance with Section 2 (3) of the Government Loans Act 1978, I rise this morning to inform this Honourable House of the execution of these borrowing transactions pursuant to the requirements of the Act.

Honourable Members will recall that on April 15th 2020 the government held a press conference updating the general public on the impact of COVID-19 on the Bermuda economy and the measures that has been taken and will be taken to support the local economy as a result of the pandemic. During this press conference I notified the public of the following: September 27, 2019 File: FS/10/ - 2 -

- The debt ceiling was raised by $150 million to $2.9 billion at the final sitting of the House of Assembly and at that time net debt stood at $2.68 billion leaving the Government with $219.6 million of borrowing capacity.

- The Ministry of Finance executed a $20 million credit facility with a local financial institution and was in the process of finalizing another $150 million facility with other local financial institutions.

- The increased borrowing capacity with current cash reserves was to assist the Government in taking the appropriate actions to mitigate the impact of COVID-19 in the short-term.

Mr. Speaker, I can now advise Honourable Members that the Bermuda Government has executed a BD$20,000,000 1 year term loan facility agreement with Clarien Bank Limited and a US$150,000,000 loan facility agreement jointly with HSBC Bank of Bermuda Limited and Clarien Bank Limited due to mature on September 17, 2020. The facilities were priced at 4.00% and 3.75%, respectively and it is encouraging that the two local financial institutions were supportive in providing Government with its financing needs in these uncertain times.

Mr. Speaker, it must be highlighted that the Government has not borrowed a total of $170 million but rather has facilities in place to borrow up to this amount. As with all credit facilities the government September 27, 2019 File: FS/10/ - 3 -

- enters into, funds will only be drawn when absolutely necessary and only funds that are drawn will be charged with interest. To date I can confirm that the government has drawn the full $20 million from the Clarien facility and approximately $10 million from the $150 million joint facility.

Currently net debt stands at $2.71 billion, leaving the Government with $189.6 million of borrowing capacity.

Mr. Speaker, these two credit facilities are just one step that the Government is taking in ensuring we have sufficient liquidity in order to offset the financial stability risks brought on by the COVID-19 pandemic. As soon as is practical, the Government intends to refinance these short-term credit facilities by issuing long-term government debt in the global capital markets. The plan will be to not only refinance our credit facilities but to also finance the fiscal 2020/21 deficit and strategically refinance current government bonds at a more favorable interest rate.

Thank you Mr. Speaker.
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