19 February 2019

Rwanda: Government Borrows Rwf15 Billion Domestically

The Government has yet again turned to the local debt market in order to raise money to fund its infrastructure project - critical for easing doing business and propelling economic development.

Through the National Bank of Rwanda (BNR), government yesterday issued seven-year Treasury bond worth Rwf15 billion - also meant to support the development of the local capital market.

The Central Bank said the Government will receive bids for the new T-Bond until Wednesday at 4pm local time.

This means that institutional investors (pension funds and insurance companies) with accounts at the Central Bank can deposit their bond application forms directly to BNR, while retail investors can approach investment advisors around.

According to the Central Bank, the cost funds or the interest on a bond, which is typically paid semi-annually, will be determined at the close of book building on Wednesday.

Book building is a systematic process of price discovery that involves generating and recording investor demand for shares during an issuance stage.

The bond will be listed on the Rwanda Stock Exchange (RSE) and start trading on the secondary market on February 26.

According to the prospectus issued by the bank, once the trading activities for the Government debt securities begin, investors' interest will be subject to withholding tax at the rate of 5 per cent.

The appetite of individual investors in the bond market has been increasing over the years with the Government indicating that their participation has increased from 0 per cent to more than 11 per cent.

Currently, there are about 16 outstanding bonds trading on the secondary market.

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