I'm thinking that if a sovereign bond issue was six times oversubscribed that you're paying too much interest on it.
I'm advised that a 5.6% coupon is high for an AA rated 10 year bond, and that the market is pricing Japan 10 year yields for dollar based sovereign risk at 3.6%.
Apparently these terms put us in the company of Mexico and Turkey.
However my main concern, over the seemingly high interest rate in this low interest rate environment, is that Government debt never gets paid back. Ever. It just gets rolled over. Politicians are short term incented creatures and that means that they rarely think long term.
Ask yourself this? Do you really see the PLP saving $500M over the next ten years to pay this back when it matures in 2020? That's after the $28M a year in interest they - or we - have to pay just to service this debt. And let's not get into the fact that they took out debt to pay down other debt.
While the rest of the world is talking about de-leveraging and living within their means after years of government deficits, Bermuda is leveraging up and increasing our deficits. What are they thinking?
Say what you want about the UBP, but they knew that you had to live within your means and that there's no such thing as a free lunch - or free healthcare.
