Government is upbeat that the Rwf15 billion (about $18.47 million) three-year Treasury bond issue, announced yesterday, will perform well despite the current economic difficulties in the local, regional and global arenas.

"We are confident that the current economic environment won’t affect it because, before we bring an issuance we are aware of the liquidity levels in the economy…This ensures that we hit our target and, better still, surpass it as has been the case with the previous issuances,” John Rwangombwa, the central bank governor, said in an interview yesterday.

The IMF projects one of the slowest growth rates for the sub-Saharan region in 20 years, this year, at 1.4 per cent, while Rwanda is expected to expand by 6 per cent compared to 6.9 per cent last year. This means there is low disposable income, thanks to the prevailing situation. This could affect investment decisions among potential investors.

Rwangombwa, however, said they have been carrying out public awareness drives across the country to encourage Rwandans to invest in bonds, noting that there is a lot of appetite for bonds among retail investors, among others. He said TBs are a safe investment vehicle, which can help Rwandans to improve their savings and livelihoods, as well as contribute to national development.

The bond issuance is part of the government’s quarterly Treasury bond issuance programme.

Bids for the Rwf15 billion three-year Treasury bond will open on November 21 and close on November 23, while settlement will be done on November 25, the bid notice published on the National Bank of Rwanda (BNR) website yesterday indicates. Interested bidders can apply for the TB with a minimum bid at Rwf100,000, while competitive bids begin at Rwf50 million, according to the BNR statement

The bank said the coupon interest rate will be payable semi-annually. However, the rate will be determined by competitive bidders, while non-competitive bidders will get the weighted average rate of the market, the central bank added. The TB will be listed on the Rwanda Stock Exchange on November 28.

Like all the TBs under the government’s quarterly bond issuance programme, launched in 2014, proceeds from this issue will be used to develop the local capital market and fund infrastructure projects.

The Rwf15 billion five-year Treasury bond issued on August 24 was oversubscribed by 139 per cent, showing a growing appetite for TBs among investors as well as confidence in the local economy. The bond, issued in May, was oversubscribed by 215.5 per cent, while that the Rwf15 billion bond issued in February got a subscription rate of 226 per cent.

In August, institutional investors took the lion’s share, at 71.3 per cent of the allocations, compared to 50.3 per cent in May. Retail investors (individuals and SACCOs) were 3.9 per cent, a decline from 14.61 per cent in May, while banks got 24.8 per cent, down from 35 per cent in May. Out of the 67 applications received, retailers accounted for 49 orders, of which 37 were from individuals, nine from Umurenge SACCOs, and three private companies.

Rwangombwa attributed the drop in the percentage level for retail investors in the August to the fact that there was one big retail investor who bid for Rwf200 million worth of bonds, which affected allocations to this segment.

The bond market recorded a staggering 910.6 per cent growth in revenue in the first six months of the year, raking in Rwf514.5 million from Rwf470.7 million worth of bonds over the reporting period.

The strong performance was a result of government’s efforts aimed at encouraging Rwandans to invest in bonds over the past one and half years, according to sector experts.