During an interview at the US-Africa Leaders Summit in Washington on Tuesday, President Paul Kagame said the country is banking on the success of its maiden 400 million US dollars Eurobond in 2013.
“The government is intending to go back into the market to raise funding for infrastructure and specifically as the president put it yesterday. It is going towards the new construction of an airport as we [Rwanda] are striving to be a regional hub and also for power projects,” Celestine Rwabakumba, the CEO of the Rwanda Stock Exchange told CNBC Africa.
(READ MORE: Rwanda makes impressive rebound)
Proceeds from the bond will also fund infrastructure projects, including the upgrade of the country’s main airport which is ranked seventh best in Africa, and number one in East Africa. The bond will also contribute to the construction of a 150-megawatt (MW) geothermal plant, as well as financing a methane power plant project which is expected to produce 100MW of power.
According to Rwabakumba, the country’s second Eurobond will perform as good as its maiden bond. The country’s 10-year Eurobond offering was priced to yield 6.875 per cent. Rwanda secured 3.5 billion US dollars, more than 8.5 times the issue size, accentuating the huge investor appetite for high-yielding African sovereign debt.
“Rwanda is known for good governance and management of its finances and there is a lot of discipline so it would not surprise me if it is oversubscribed the same as the previous one,”Rwabakumba said.
“Looking at the appetite from investors looking into Rwanda and East Africa in general, the Kenyan bond was oversubscribed and Rwanda was recently upgraded by Fitch. We [Rwanda] have come from ‘B’ to ‘B+’, basically it is an investment grade at the same level as Kenya,” Rwabakumba explained.
(READ MORE: Fitch upgrades Rwanda to ‘B+’ with a stable outlook)
Rwanda’s long-term foreign and local currency Issuer Default Ratings (IDR) was upgraded by Fitch Ratings last month. The East African nation was upgraded by the international ratings agency largely because of its track record of prudent and coherent fiscal on monetary policy as its stellar growth record.
The country also saw the issue ratings on its senior unsecured foreign and local currency bonds as well as its Country Ceiling upgraded to ‘B+’ from ‘B’.
Rwanda’s impressive GDP growth has often approximately been eight per cent. The country’s first-quarter reading showed a stronger than expected rebound in economic growth with a 2.7 per cent increase compared to 2013. The nation’s economy is forecast to expand by 7.5 per cent this year as well as 2015.