KIGALI, Aug 3 (Reuters) – Rwanda raised $620 million through a 10-year Eurobond, the finance ministry said late on Monday, part of which will go towards retiring an outstanding dollar bond.

Like global economies, the East African nation has experienced a surge in public debt in the wake of the coronavirus crisis, which hit revenues and forced the government to borrow more.

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Total debt climbed by 13% last year, driving the overall level to 71% of GDP, which is expected to jump to 79.7% at the end of this year, the finance ministry said in May.

Still, investors piled into the latest issue, offering $1.6 billion in total. The eventual interest rate for the bond was 5.5%, the ministry said.

“The lower yield of this issue will result in a reduction in our annual interest payments over the next 10 years, strongly contributing to our debt sustainability strategy,” said the central bank governor, John Rwangombwa.

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Bond proceeds will be used to pay off creditors of the existing Eurobond when it matures in May 2023, while the rest will fund economic recovery programs.

The government predicts that the economy will grow by 5.1% this year, after contracting by 3.4% last year, as the COVID-19 pandemic starts to ease.

(Reporting by Clement Uwiringiyimana Editing by Duncan Miriri and Clarence Fernandez)