{{President Paul Kagame this week revealed more details of Rwanda anticipated debut Eurobond issue. Rwanda is set to take advantage of low borrowing costs in international debt markets.}}<\/p>\n
Since much of its overseas aid was cut off by some international donors, the Rwandan government has faced problems filling the gap in its budget.<\/p>\n
The issue of Eurobond was raised in the recently passed Rwandan government budget with reports suggesting the sale will raise in the region of $350m.<\/p>\n
According to the Rwandan government, the money would be spent on infrastructure to maintain growth in an economy that has been expanding at more than 8% a year over the past decade. <\/p>\n
President Kagame was quoted by Bloomberg at a conference in Miami this week saying that the Eurobond issue will be completed by the end of July this year. <\/p>\n
Rwanda is not the only country in sub-Saharan Africa that have been putting together plans to for Eurobond sales. <\/p>\n
In September last year Zambia issued its Eurobond which was massively oversubscribed and produced a yield of around 5.5 % \u2013 allowing the southern African nation to borrow at a similar cost to major European economies like Spain. Zambia Eurobond issue was successful as the country raised $ 750m. <\/p>\n
In recent weeks, Angola has announced plans for a $1bn issue this year and Tanzania has raised $600m through an oversubscribed according to the FT. <\/p>\n
With yields on their outstanding Eurobonds hovering around 4.5 % in recent months, Nigeria and Ghana are expected to follow with additional dollar-denominated issues this year.<\/p>\n
Investors are expected to positively react to Rwanda`s offering for its foreign investor-friendly economic governance.<\/p>\n
Rwanda is ranked second among sub-Saharan African countries in the World Bank`s ease of doing business, behind South Africa, and is highly regarded by rating agencies \u2013 Standard & Poor\u2019s and Fitch both rate it B. according to a blog by Andrew Bowman. <\/p>\n
Andrew Bowman argue that the most recent government budget outlines a large program of spending reductions in response to aid cuts, which are expected to slow Rwanda\u2019s GDP growth to 7.1% this year from the central bank\u2019s previous forecast of 8 %. <\/p>\n
Stephen Charangwa, a frontier market fixed income specialist at Silk Invest, told beyondbrics.<\/p>\n
\u201cI would be surprised though if it yielded close to Zambia. It\u2019s more likely to be around 6%. Apart from the positives of the strong institutions and good governance, it\u2019s a small economy, without either the consumer play of somewhere like Nigeria, or the significant natural resources of Zambia.<\/p>\n
\u201cBut with the market looking for supply from the region, and Rwanda\u2019s good macro-economic fundamentals, I think it will be well received.\u201d<\/p>\n
{Financial Times}<\/p>\n","protected":false},"excerpt":{"rendered":"
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