Prime Energy Plc, a local renewable energy developer, listed its inaugural green bond worth Rwf9.58billion on Rwanda Stock Exchange (RSE) on November 5, becoming the first company to list a green bond in Rwanda.
The bond offer was fully subscribed, reflecting significant investor confidence in Prime Energy's growth and sustainability credentials.
The firm exceeded its initial target by Rwf80 million, raising Rwf9.58 billion. It attracted investors such as Rwanda Social Security Board (RSSB), Agaciro Development Fund (ADF), Bank of Kigali (BK), and Rwanda National investment Trust (RNIT), Military Medical Insurance (MMI), among others.
ALSO READ: Prime Energy lists inaugural green bond on Rwanda Stock Exchange
The bond, which carries a seven-year tenor, was issued in two tranches - the Rwandan franc tranche and the United States Dollar tranche, both priced at 13.75 per cent and 9.5 per cent per annum, respectively.
"The green bond we are listing today is not merely a financing instrument. It represents our commitment to transparency in our operations, environmental stewardship, strong returns for investors, and contributing to Rwanda's economic development," Cherno Gaye, Chairman of Prime Energy Plc, remarked.
Gaye highlighted that the step the firm was taking is significant in the journey to not only support the government's goals of clean energy and climate action but also to pave the way for a more sustainable and green future for Rwanda.
ALSO READ: Prime Energy announces first-ever green Bond issuance in Rwanda
A significant portion of the proceeds will be allocated to investing in the new Rukarara VI renewable energy project, part of Prime's Green Finance Framework, located in Nyamagabe District.
Additionally, funds will be directed toward the maintenance of existing hydropower plants, including Rukarara II, Mukungwa II, Gisenyi, and Gashashi.
Prime Energy's green bond issuance follows another sustainability linked bond that was issued by the Development Bank of Rwanda (BRD) in August and listed on the local bourse. This was the second SLB that the bank had issued following a successful subscription.
The bond, part of BRD's Rwf150 billion medium-term note programme, was oversubscribed at 130.2 per cent. The oversubscription provision in the bond terms enabled BRD to tap into an additional Rwf3.5 billion in addition to the proposed Rwf30 billion target issue size.
The first tranche which marked BRD's debut on RSE in October last year was equally worth Rwf30 billion and was as well oversubscribed at 110.5 per cent, perhaps demonstrating increased investor appetite as more institutions embark on raising funds at the capital markets.
ALSO READ: Why Prime Energy Plc is issuing a green bond
According to Celestin Rwabukumba, CEO of RSE, the listing of Prime Energy's green bond, along with other successful issuances, illustrates the vitality of our market and the economy at large.
"We are seeing more local investors participating, which is an exciting sign of confidence in the market," he said, emphasising the growing participation of local investors in green financing and the role of Rwanda's capital markets in supporting sustainable investments.
Rwabukumba asserted that there has been strong appetite for green investments, suggesting that more local investors are becoming aware of the potential of the capital markets for supporting sustainable projects.
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Rwanda's green financing agenda
According to Linda Mutesi Rusagara, State Minister in charge of Public Investment and Resource Mobilisation at the Ministry of Finance and Economic Planning, Rwanda has made great strides in sustainable finance but said there is still a long way to go for both the public and private sector.
"Today's bond as well as the recent bond by BRD has shown us that the green and sustainable agenda unlocks new type of capital for the private sector. However this capital requires extra effort and we hope today serves as motivation to all of us in the public and private sector to go the extra mile," she said.
Rwanda recently launched the Climate and Nature Finance Strategy as part of the broader efforts to mobilise more green financing.
Steven Biganiro, Director General of Capital Markets and Investment Schemes at the Ministry of Finance and Economic Planning, emphasised the government's commitment to making green bonds more accessible to investors and fostering sustainable development.
To achieve this, the government is developing a comprehensive "taxonomy" that will serve as a guideline for green investments. This taxonomy will help to clarify what constitutes a green investment and provide incentives to encourage participation.
Moreover, the government is prioritizing the inclusion of local investors in the green bond market. By raising awareness and educating the public about green bonds, they aim to empower individuals and institutions to understand and participate in these sustainable investments.
"We are developing a taxonomy that will serve as a comprehensive guide for green investments, including incentives and awareness campaigns to encourage broader participation in the green bond market," Biganiro said.
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ALSO READ: Prime Energy raises Rwf9.58 billion in inaugural green bond
These frameworks and standards are seen as key towards guiding investors and financiers and further boost the credibility of financial instruments.
According to Grace Kibuthu Ogola, Operations Officer for Capital Markets at the International Finance Corporation (IFC), innovative financing tools and local capital markets will unlock the funds needed for sustainable development in Rwanda and Africa.
"It is very clear that public funds and the resources of multilateral development banks are limited compared to the immense needs of funding for development," she noted.
Ogola added that there is a need to catalyse and channel funds from the private capital to facilitate global public goods and tackle immediate crises and long-term challenges.
She also stressed that local capital markets play a crucial role in supporting small and medium-sized enterprises (SMEs) and driving sustainable growth by enabling access to much-needed funding.
