Rwanda to issue US$21.8 million treasury bond

paulkagame-dfid-flickrRwanda has announced plans to issue a treasury bond worth US$21.8mn for five years to invest in infrastructure projects in the country

According to local reports, the bond will be issued on 27 August 2014. Brokerage firms are preparing by negotiating with investors.

This bond is expected to boost wealth redistribution and address inequality, according to Rwandan stockbroker Shehzad Noordally. Since the east African nation is considered a risk-free economy with minimal inflationary risks, the issuance of such a bond would encourage local banks.

Emmanuel Mugiraneza, public relations officer at Capital Markets Authority, added, ”We need more bonds from the government, corporates, municipalities and bonds from other relevant institutions. The government has pledged to release quarterly bonds, which will trigger a saving and investing culture among Rwandans.”

The US$21.8mn bond follows Rwanda’s US$400mn debut Eurobond, issued on the Irish Stock Exchange on 25 April, 2013, with an initial coupon rate of seven per cent. The 10-year sovereign debt earned over US$3.5bn in subscriptions from 250 investors.

President Paul Kagame announced during the recent US-Africa Leaders Summit in Washington that the country will sell a US$1bn bond as its second international bond in 2015. Despite Rwandan bonds selling like hot potatoes, brokerage firms are demanding government incentives.

”There is less cash in the market, so getting large investors requires some workout. We need extra incentives, not just the commission,” explained Isabella Ingabire of brokerage firm Africa Alliance.

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