Bundler Hangs

I'm learning rails and have an application running on my local
machine.

I now want to deploy to a production server. So I:

cap deploy:setup

and that runs successfully

cap deploy: check

and that too runs successfully

cap deploy

A bunch of output scrolls by in the terminal and then it prompts me
for a my login with the following message:

** [out :: <myhost> ] Enter your password to install the bundled
RubyGems to your system:

I enter the password and the output stops and bundler appears to hang.

Can anybody point me in the right direction to get unstuck. The
output is not sufficient enough to give me any hints at where things
are breaking down.