Rwanda to issue Rwf15 billion for infrastructure projects

by Elayne Wangalwa 0

The East African nation which is one of Africa’s fastest growing economies plans to issue 15 billion Rwandan francs to finance the nation’s infrastructure projects and enable capital market development. 

“This bond is danger free ensured by the government fluid as bonds could be sold at whatever time at the Rwanda Stock Exchange (RSE). It guarantees a great financing return and might be vowed as security for any advance,” Claver Gatete, Rwandan finance minister told CNBC

(READ MORE: Fitch upgrades Rwanda to ‘B+’ with a stable outlook)

According to Gatete, members of the East African Community (EAC) and around the globe can invest in the bond. EAC members will have a withholding tax of five per cent while foreign investors 15 per cent.

“The issuance method for this financial year proposes that household obligation financing ought not surpass one for every penny of the anticipated GDP with a specific end to abstain from swarming out of the private area,” 

In February Rwanda’s treasury bond of 12.5 billion Rwandan francs was oversubscribed by 140 per cent. The country is seeking to offer another domestic bond in November as part of a plan for regular issues to develop its capital market.

The bond is expected to trade at the Rwandan bourse by September whereby three government bonds are already trading.

(READ MORE: Rwanda’s economic growth rebounds in Q1)

The oversubscription of recent bonds issued by the World Bank’s lending arm, International Finance Corporation and the government indicates investor enthusiasm in the country’s local bond market.

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.