The Rwf15.5 billion International Finance Corporation (IFC) bond issued last week has been oversubscribed by over 111 per cent, showing investors’ continued confidence in Rwanda’s economy and business environment.

The IFC, the private sector arm of the World Bank, raised Rwf32.8 billion from the issuance or 111.6 per cent oversubscription rate, which is more than double what they had targeted, a statement from CDH Capital, one of the brokerage firms handling the sale at the Rwanda Stock Exchange, says.

 Shehzad Noordally, the CDH Capital chief executive, said in the statement that an interest rate of 12.25 per cent per annum was agreed upon.

"Since it was oversubscribed, the arrangers are in the process of allotment whereby the different bond buyers are chosen,” said Jean Aime Habimana, a broker with Standard Bank Group Securities. 

Habimana said after the allotment process, the five-year IFC bond would be approved by the Rwanda Stock Exchange to trade on the secondary market.

This will make the bond the second corporate bond on the bourse. There is currently a 10-year I&M Bank bond worth Rwf10 billion issued in 2010.

Inactive bonds

There are also three other government bonds on the exchange with the Rwf12.5 billion treasury bond issued in February to raise funds for infrastructure projects and boost activity on bourse being the most recent.

Habimana said a number of factors led to the inactivity of bond trading in the secondary market, pointing out that they often receive bids but fail to get the supply (sellers).

"The investors, who are holding onto the bonds are maybe satisfied with what they have and are waiting for the maturity periods of the bonds or haven’t yet gotten any financial constraints to pressure them to sell the bonds,” he said.

Investors of bonds on the Rwandan bond market are mainly institutions and a few individuals, according to the brokers.

Habimana was, however, optimistic that with the IFC being oversubscribed, more participants will feel the urge to buy and sell and make extra money.

The IFC bond is part of the institution’s Africa debt expansion programme. 

The proceeds from the bond is expected to go into financing the institution’s development programmes in the country.