Appetite for government paper has continued to grow significantly among retail investors, indicating that efforts by government and other capital markets stakeholders to encourage Rwandans to invest in bonds are paying off.

According to a statement from the central bank yesterday, 48 orders of the 57 applications received by the National Bank of Rwanda (BNR) for the Rwf10 15-year Treasury bond issued on Wednesday, May 25 were from retailers.

This is an increase from 9.77 per cent in February, representing 14.61 per cent of the total amount offered, John Rwangombwa, the BNR governor, said in the statement.

Institutional investors and banks were allocated 50.39per cent and 35 per cent, respectively.

Retail investors in bonds have increased from one per cent in February 2014 to 9.8 per cent in February this year. Institutional investors constituted 53.2 per cent in the February bond issue compared to less than 10 per cent in 2014.

Rwangombwa attributed the increase in the participation of retail and institutional investors to consistent awareness campaigns conducted cross the country, as well as employing multiple channels to educate Rwandans about the benefits of investing bonds.

"These results show the confidence that investors have in the Governmentof Rwanda in its capacity of debt reimbursement, transparent and coherent debt management policies,” the BNR governor said.

Commenting on the Treasury bond issue earlier, Robert Mathu, the Capital Market Authority chief executive officer, said the bond issuance programme is critical to efforts geared at increasing locally-generated funds to finance the national budget.

He added that the programme has also boosted the country’s capital market by diversifying product offerings.

Mathu said the increasing appetite for government paper among domestic retail investors and institutional investors (domestic and regional) indicates confidence in the local bond market and economy, generally.

Like the previously Treasury bond issuances, the funds raised from the Rwf10 billion will be used to finance infrastructure projects, and develop the local capital market, Rwangombwa said in the statement yesterday.

The performance of the latest TB was, however, dropped marginally; though the bond was oversubscribed by 215.5 per cent. The last Rwf15 billion bond, which was issued in February, was oversubscribed by 226 per cent.

Rwangombwa explained that BNR employed a book-building method to determine the price of the bond. The Treasury bond’s final coupon rate and yield were both set at 13.5 per cent. The bond will be listed on Rwanda Stock Exchange on May 31, and will be redeemed on May 9, 2031.

The Rwf10 billion 15-year bond issue is the longest tenured bond issued ever since the Government of Rwanda started issuing Treasury bonds in 2008, according to the central bank statement.

Meanwhile, the government bond issuance calendar for the next financial year 2016/17 will be published in July, according to BNR.

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