The Rwf12.5b Government Treasury Bond (GTB) issued by the central bank was highly successful, hitting a subscription rate of 140 per cent, Finance minister Amb. Claver Gatete has said. He said eight per cent of this was from regional investors, mainly Kenya.

The Government, through the National Bank of Rwanda (BNR), started accepting bids from investors on Monday ranging from Rwf100,000 to Rwf50m and closed the process yesterday morning. 

Amb. Gatete said BNR received 56 bids from different categories of investors, with banks taking a lion’s share at 52.85 per cent.

He said local investors were the majority, representing 94.26 per cent, while regional investors accounted for 8.04 per cent. 

BNR employed book building method to determine the price of the bond with the initial guidance announced at upper 11 per cent, but was later revised to between 11.575 and 11.625 per cent, closing at 11.625 per cent. 

But the T-Bond’s coupon rate was set at 11.475 per cent. Gatete, however, said there was still need for more sensitisation so that people understand the benefits of investing in financial markets. 

John Rwangombwa, the BNR governor, said the bond will be listed on the Rwanda Stock Exchange on March 7. 

"People who weren’t able to participate in the primary market (the initial Treasury Bond sale by BNR) now have a chance of participating in the secondary market (Rwanda Stock Exchange),” said Gatete. 

He said more participation from individual and institutional investors in the bond ensures balance distribution of income within the economy as it allows both categories to earn from the bond. 

Marketing the bond

The marketing strategy of the bond consisted of split road shows covering the four provinces of the country, while a regional road show was organised in Nairobi, Kenya, about a week ago. 

Gatete added that government was committed to the regular issuance of government paper to develop the local capital market and to promote the culture of long-term savings through the securities exchange. 

According to a statement from the Ministry of Finance, next issuances are scheduled for May, August and November. 

The December 2013 Debt Sustainability Analysis report by the International Monetary Fund indicated that Rwanda has a low risk of debt distress and may, therefore, use non-concessional borrowing without unduly affecting debt sustainability. 

Ministry of Finance figures show that Rwanda’s total public and publicly-guaranteed debt is estimated at $2.16 billion, representing 30.2 per cent of the GDP as of June last year. 

Gatete said the Rwf12.5bn will be used for different infrastructure projects government plans to undertake. 

"Since the projects will be undertaken by the private sector, this will spur growth through more government spending,” he said.