{The Government of Rwanda will next week issue a seven-year fixed coupon rate treasury bond worth 21, 724,800 U.S. dollars to attract funds for investments in infrastructure and boost the country’s capital market, officials announced Friday.}
Rwanda’s Minister of Finance, Claver Gatete, and the National Bank of Rwanda (BNR) Governor John Rwangombwa announced this Friday at a press conference in Kigali.
The purpose of the bond is to facilitate the development of the capital market as well as fund infrastructure projects, according to a release issued by the finance ministry.
The bond issuance is part of a Government of Rwanda’s Treasury bond issuance plan for Fiscal Year 2014/2015.
With this latest bond, the government will have issued three bonds so far under the quarterly issuance program since February – having issued the 1.7 million U.S. dollars Treasury bond which started trading on the floor of the Rwanda Stock Exchange (RSE) in September.
Officials said the two previous bonds which were oversubscribed by 140 and 232 percent respectively underlined investor confidence in the outlook for Rwanda’s currency and economy.
The book building process for the bond to be issued next week will open on November 24 and close on November 26 when the coupon rate for the bond will be determined.
The bond will be listed on the Rwanda Stock Exchange (RSE) on December 2, according to Rwangombwa.
Previous bond issuance attracted institutional investors, including pension funds and insurance companies.
The participation increased from less than 10 percent to more than 50 percent while foreign participation of banks, institutions and retailers represented 8 percent.
Government officials explained that next week’s bond will provide an additional attractive investment opportunity by ensuring a good return on investment which can also be pledged as collateral for any loan in the country.
Officials said the choice of the maturity for seven years will help to attract a broad investor base, including local, regional, and international bidders.
Bidders have also been granted tax incentives with withholders in the East African Community (EAC) paying a 5 percent tax on interest collected while non EAC residents will pay 15 percent.
Gatete expressed confidence that more Rwandans will subscribe to the bond next week because they have been sensitized to trade on the Rwanda Stock Exchange (RSE) and to make investments in different government bonds.
The issuance of next week’s bond is in line with the government’ s strategy for domestic debt financing requirement in the current fiscal year which ends in July next year.
Its proceeds will be invested in infrastructure projects such as building roads and supplying water as outlined in the first quarter of this fiscal year.
The Capital Markets Authority chief executive officer, Robert Mathu, said that the new Treasury bond will boost operations on the country’s capital markets because it will provide long term capital that is crucial for funding long term projects.
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Xinhua}}
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