The government will next week issue a Rwf15 billion five-year treasury bond, the second of its quarterly issuance programme, a statement from the National Bank of Rwanda (BNR) indicates.

Proceeds from the bond will be used to finance the country’s infrastructure projects and facilitate capital market development. 

The government started its quarterly treasury bond issuance in February with Rwf12.5 billion that was oversubscribed by 140 per cent.

According to the central bank statement, the treasury bond coupon rate will be determined once the book building process is complete at 4pm on Wednesday next week.

Its redemption date is August 30, 2019.

BNR, the primary issuer, is receiving bids for a minimum of Rwf100,000 for individual investors, while companies will enlist for competitive bids of up to Rwf50 million.

The statement indicates that residents and non-residents with a central securities depository account at the central bank (opened through licensed commercial banks or capital market intermediaries) are eligible to bid for the bond.

Successful bidders will know their results through email on Wednesday and interest payments will be twice a year. 

Condition for interest

The interest will be subject to a withholding tax of 5 per cent for East African Community residents and 15 per cent for international clients.

Shehzad Noordally, the chief executive of CDH Capital, was buoyant about the issue, saying there is huge investor appetite.

Noordally said with time, bond trading will be very active in Rwanda as investors will show more demand for the bonds.

"The more bonds we have in the market, the more customers will come to bargain and buy it,” he said.

Once the allotment process is complete, the bond will be approved to trade in the secondary market, the Rwanda Stock Exchange.

It will be the fifth government bond at the bourse in the recent past, following two other corporate bonds of I&M Bank and the International Finance Corporation.